Money in Medicine: The Howard Hughes Medical Institute

The Third Installment of NextGen's "Money in Medicine" Series

When one thinks of professions where risk-taking is a valued attribute, medical research is not likely the first to come to mind. Medical research, as it is sometimes presented, is ordered and neat to the point of dryness, compartmentalized into specialized areas, and adherent to predictable time scales and funding requirements. Risk, under this system, is a thing to be minimized or eliminated.

Not so at the Howard Hughes Medical Institute (HHMI), an organization that operates on the principle that without great risks there can be no great achievements. By cutting a bit against the grain of the research world, by creating a different culture for researchers, by focusing on long-term goals and big-picture problems, the Howard Hughes Medical Institute has found the successes to make the risks worthwhile.

"We're here to make a difference, not just spend money responsibly," says Thomas R. Cech, President of HHMI. That is a bold commitment from the leader of one of the largest non-profit organizations in the world, but judging from the 10 Nobel prizes earned by HHMI scientists in the past two decades, it's also an ethic that has served HHMI well.

The unique financial situation of HHMI helps Cech to make good on his promise. All of the organization's $12.8 billion endowment originated from the 1985 sale of the Hughes Aircraft Company, which was owned by HHMI, for $5 billion. Since then, the endowment has been built and the institute run entirely on investment income, which provides HHMI with an degree of freedom to produce and create without restrictive responsibilities to taxpayers or donors.

While these self-sustaining assets liberate the Institute from the demands of external financers, they also create unique challenges not faced by a typical medical research university. "Universities receive tuition, grants, and annual giving, in addition to endowment income. We have only one revenue source, so risk-management is a huge issue for our investments," says Cech. And when market returns fail to reach expectations, HHMI has to choose to cut programs or cut into the endowment. "Our budgets average 5% of the endowment value," says Cech, "but when the stock market was down in 2000-2002, we were spending a higher percentage just to keep our programs afloat." Nevertheless, with an endowment that has nearly tripled in two decades and an operating budget of $564 million, Hughes remains in an exceptional position to "make a difference" with the work it undertakes.

One way HHMI makes a difference in medical research is literally by doing research differently. Guided by the principle of "people, not projects," HHMI foregoes the traditional grant process and instead hires scientists to the prestigious post of HHMI investigator. "We're a medical research organization, not a foundation," says Cech, "and therefore we need to be engaged in the direct conduct of research. So we employ investigators, rather than giving grants to someone else's employees."

To select investigators, each year HHMI asks top universities, medical schools, and non-profit research institutions to nominate "two to four of their most innovative researchers who are in the ascending phase of their career." HHMI purposely looks to these ascendant, active, and often younger scientists who will be eager, as HHMI describes on its website, "to take risks, to explore unproven avenues, to embrace the unknown - even if it means uncertainty or the chance of failure." As Cech emphasizes, a position as an HHMI investigator is not meant to be rewarded as a "lifetime achievement award".

Continued on page 2