The Man Who Would Save the Economy

In the early 1990s, the executives of a Minnesota behavioral clinic summoned Field to its offices. They told him their clinic risked closing because it was $7 million in debt, and had another $70 million in accounts receivables—in other words, $70 million worth of as-yet-unpaid patient bills. The executives asked Field to find a way to bring it back from the brink. His ultimate solution was a structured-finance deal.

The beauty of structured finance (and there is beauty in it) is twofold. One: If you're the company, you get paid to have liabilities taken off your balance sheet. Even better, if those liabilities—here, the unpaid healthcare bills—default, you're no longer on the hook. Two: If you're the buyer of the securities, you collect easy money on the interest payments for the debt that had been made into the bond.

Field took this basic arrangement a step further. The genius of his idea was that nothing would be hidden. As in any structured-finance transaction, he'd offload the unpaid hospital bills to what's known on Wall Street as a "special-purpose vehicle,” which would then turn the debt into a security and sell it to investors. But Field would also use software to tag and keep tabs on the underlying claims, making it possible to follow which patients—or insurance company, or government agency—had settled up, and which hadn't, and if they hadn't, when they might. It was a necessary step: An earlier attempt to bring structured finance to the hospital world had led to a giant Ponzi scheme. Also, insurance companies are notorious for underreimbursing healthcare claims. Field figured that letting investors know when bills were paid (or not) would give them a critical sense of security.

The Minnesota clinic closed before Field's fix could be implemented. But he stuck with the notion, refining it, showing that you could, for starters, strip out certain sensitive details—like a Social Security number—from the data a bond buyer saw, without compromising the usefulness of the data itself. Field liked his idea so much that in 2000 he secured a patent for it.

In the years since, a few other hospitals have been on the cusp of working with Field. But each time, the hospitals got their investment bankers involved, and each time the bankers said, "You don't need Richard to complete this transaction.” Ultimately, each deal fell through. "It remains my life's biggest disappointment,” Field says. (Adds his friend Ron Parkinson, the chief financial officer of Ames Textile in Lowell, "I've been consulting Richard through his woes for years.”) Field believes he could have helped save hospitals billions of dollars, while, of course, also making some decent change, too.

When Field read the Journal story on September 26, and then read and reread the Moody's report, "it was as if the cavalry had finally come marching over the hill.” It took all of a second for Field to realize that his patent could apply just as well to all asset-backed securities, that his method for stripping out identifiers could work just as well for, say, a mortgage that had been made into a bond. But even more important, Moody's was saying it would potentially give higher credit ratings to firms that offered the kind of transparency he could provide. In other words, there was at last a market for Field's big idea.