Former President & CEO, INTEGRIS Health

From The Desk Of…

Monthly articles written by Stan Hupfeld and published in the Journal Record.

Medicare for All – Part I

Published in The Journal Record
December 18, 2019

If you have watched the Democratic debates recently you’ve undoubtedly caught the passion that several of the candidates have for the concept of “Medicare for All.”  The ideological debate ranges on the one hand from eliminating private and employer-based insurance that would move all of us into a Medicare-like program, to the alternative being proposed by more moderate contestants to give all of us a choice to sign up for a Medicare program should we desire. 

Most of the pundits are noting that this debate over the extension of Medicare is a new political phenomenon representing how far to the left many Democratic candidates are approaching.  The truth is that while the passion evidenced around the concept may seem new and different, its roots go back more than sixty years. 

One of the signature programs of President Lyndon B. Johnson in 1964 after he decisively beat Barry Goldwater was the establishment of a health program for the elderly.  This program was to be financed by a combination of payroll taxes from both the employer and the employee.  The idea was that most people were retiring in their 60’s and losing their employer-sponsored health coverage program thus making them liable for extreme health expenses at the very point in their life when they were least able to afford them. 

President John F. Kennedy had been assassinated in 1963, and his vice president, Lyndon B. Johnson, became president. Because of sympathy for the elderly among the general population and because of Johnson’s significant legislative skills and his recent electoral mandate, passage of Medicare seemed very likely.  Johnson had several key programs (including the Voter Rights Act) that he was intent on passing. He skillfully used the dead president’s legacy to gain legislative advantage, but he needed help to pass Medicare.  He got his help from an unlikely source, a politically conservative legislator from Arkansas.

                Enter United States Representative from Arkansas, Wilbur Mills.

Next month in Medicare for All – Part II we shall see how Wilbur Mills used the popularity of several conservative concepts to get Medicare passed.

Social Share Toolbar

Rural Hospitals at a Crossroads

Published in The Journal Record
November 20, 2019

In a recent article in the Daily Oklahoman there was a story about a charlatan who had taken advantage of several desperate rural hospitals in Oklahoma, Missouri, and Kansas.  As it turns out rural hospitals can charge more for routine lab tests than their larger neighbors.  This individual would convince rural hospital boards he could save their hospital.  The scheme was to solicit lab tests to perform on patients (not citizens of their community) and reap additional payments.  Conceptually, payments flowed into the hospital coffers, but mostly into this individual’s pocket.  This Ponzi scheme was eventually detected and once again many rural hospitals were left at a financial death’s door.

                The problem is clear that the good citizens of these communities were desperate to save their local hospitals.  This made them easy targets for disreputable and dishonest schemers.  What is it about rural hospitals that makes them so vulnerable in today’s economic environment? 

First, they’re heavily dependent on Medicare and Medicaid with very little private insurance in their revenue base.  Private insurance is one of a few opportunities hospitals have to make a margin.  As a result, these hospitals often exist for years simply on cash flow with no profit and thus no reserves.  Consequently, they have little ability to update their physical plant or to purchase today’s sophisticated technology.  As a result, they become increasingly unattractive to newly trained physicians who expect sophisticated technology to practice today’s medicine.  As a result, they often are in a death spiral.

                The second problem is that all too often their leadership at the board and community levels refuses to recognize their clear economic eventuality.  Hometown pride makes it almost impossible for them to reach out for obvious forms of help.  For instance, several rural communities could combine and collaborate on building one hospital centrally located between them.  The additional volume would substantially improve the financial outcomes of the combined institution.  However, local pride often influenced by competitive football teams makes such cooperation almost impossible.  Some communities, however, are smart enough to reach out to major health care systems in nearby metropolitan areas to insure their survival.  However, local pride often doesn’t allow them to see a solution before they have become so desperate that they are an unattractive acquisition.

                Rural hospitals in America are at a crossroads. The current financial scenario almost insures difficulties and makes them particularly vulnerable to any carpetbagger with a sack full of tricks that are marginally ethical and financially unstable.

Social Share Toolbar

A Slow or a Quick Death?

Published in The Journal Record
October 23, 2019

Most people, when asked about their death, commonly respond that they would like to pass away quietly in their sleep at a very old age, not having suffered any lingering illnesses. A quick quiet death is preferable to a long painful one.  If we can judge by the rhetoric of the Democratic candidates for president we are in the process of choosing between a quick death for private health insurance if Medicare for All is passed, or a slow lingering passage if the more conservative candidates have their way and a public option is draped around the Affordable Care Act (commonly referred to as Obama Care).

                The public option is an idea that was floated during the debate over ACA but was never included in the final legislation.  The basic concept is that the federal government would be able to compete with private insurance in a competitive marketplace where individuals and companies would have the choice of selecting a Medicare-like program or plans offered by private insurance companies.  What could be fairer?  The insurance companies and the government could compete heads up for America’s insurance business.  There is, however, one significant problem.  Currently medical providers in this country negotiate with private insurance companies on pricing.  Larger, more powerful, and more complex health systems have an advantage in this negotiation than small rural clinics and hospitals.

                The point is, there is a negotiation.  In the Medicare program there is no negotiation.  The government decides what they will pay, and providers can either accept it or refuse to take government funded patients.  In a public option program this gives the government huge advantage on the cost of coverage.  Because of this advantage private insurance will soon find it cannot compete because the government’s ability to purchase services at far cheaper rates.  What this means, of course, is that over time private health insurance would be at such a disadvantage that they would find themselves in an impossible competitive position.  This would lead to a slow death of private insurance.  Medicare for All essentially eliminates all private insurance.  A public option eventually squeezes all competitors out of the market.  Either way America ends up with a single-payer system. 

Take your pick, a slow or a quick death.

Social Share Toolbar

Market Forces

Published in The Journal Record
September 25, 2019

When my father thought someone, perhaps a neighbor, friend, or relative had too much of anything, maybe money, clothes, cars, he would say, “Bob has more _________ than Carter has liver pills.”  I never had a clue who Carter was, and certainly had no idea what liver pills were for.  Years later when I used that expression on my own children they would often look at me as if I had lost my marbles.

As it turns out, there really were Carter’s Liver Pills.  They were introduced in the mid-1800’s and were so popular as an elixir for conditions as widely varied as headaches and constipation.  Why Carter had too many of these I will never know but they may aptly describe much of the condition of the medical system today.

In a typical urban setting there is an extraordinary plethora of medical devices, with capabilities that are seemingly available on every corner.  There is a saying in the hospital community that there are more MRI machines in metropolitan cities in the United States than in the entire country of Canada.  While this may be an exaggeration there is still a ring of truth to it.

Our technological capabilities are enormous.  Common classical conservative economics say that when any good or service is readily available the market will act to reward the most efficient and lowest cost provider of that service.  Four gasoline stations on a corner drive down the cost of gasoline.  Four MRIs in a corner drive up the price of MRIs.  The reason?  The health care market is not generally responsive to market forces.

The average consumer is subject to the wishes of a physician and is protected from the economic consequences of their decision by generous health insurance policies.  This insurance protection has led to massive availability of the most sophisticated technology and a disregard for price.

The most interesting question is, “What would the health system look like today if the economics of health care were not fueled and stimulated by this insurance largesse?”  my assertion is that it would be significantly less robust technologically.

So, my father may have indeed been right.  Carter clearly had too many liver pills.

Social Share Toolbar

Humans versus Machines








Social Share Toolbar

Always true, or a nuance?

Published in The Journal Record
July 31, 2019

Some things are true 100% of the time.  The sun rises in the East every day and the square root of 49 is always seven. 

Some things, while they appear to be true, may have interesting nuances making us question their infallibility.  One is that if consumers know the pricing of goods or services, they will be more aggressive and critical buyers. 

The president just signed an executive order requiring a new level of price transparency in medical and hospital care.  Who could argue with such a move?  Clearly, this will have a salient effect on consumers making selections for their personal or family care. 

There is one quirk in this otherwise rosy scenario.  People rarely pay published prices.  Every hospital negotiates with every insurance company for a discount off their published pricing.  The discount amount generally depends on the leverage an insurance company has, meaning how many patients can they direct to any one facility or provider.  The more patients a hospital gets from insurance company A as opposed to insurance company B, the greater the discount company A can negotiate.  It’s volume pricing pure and simple.  It’s very similar to what Wal-Mart does every day.  Even those with no insurance almost never pay retail pricing.  Hospitals generally discount heavily or, in some cases, completely write off the cost for indigent patients. 

Let’s be clear.  I’m not defending the system, just stating the obvious.  This pattern of volume discounting has grown  up over the years.  Because of its complexity it can lead to confusion on the part of consumers, and employers who may be providing health insurance. 

So, while all of us applaud the president’s decision, the impact on consumers may be significantly overstated.  Small rural hospitals with low patient volumes have little leverage in negotiations with insurance companies; therefore, they may be paid less for similar services.  Small surgery centers specializing in low cost, high margin, low acuity surgeries tend to be very aggressive on their pricing.  A tonsillectomy done at a surgery center can appear to be significantly more price advantageous than one done at a large complex hospital.

One of many questions one must ask is, if something goes terribly wrong at a free-standing surgery center, what happens to the patient?  As you might guess, an ambulance is called, and the patient gets transferred to a sophisticated hospital for their recovery.

Perhaps in health care the sun doesn’t always rise in the East.

Social Share Toolbar

Is it an addiction?

Published in The Journal Record
July 3, 2019

Last month on the eve of D-Day I told the story of how the U.S. Army addicted my father to cigarettes, supplying him with a carton as he landed on Normandy Beach and fought his way to Germany.  Years later I remember my father smoking two packs a day and the pungent smell of his clothes and the stale small of his breath.  In his late 40’s (for a reason I no longer remember) he quit smoking cold turkey and not only did he rid himself of cigarettes, he started exercising vigorously.  Every day he would run between five and seven miles.  He became razor thin and very fit.

I am aware of other people who have a similar smoking habit just as severe as my father’s who find it impossible to quit.  As a result of decades of smoking they have perpetual medical problems including heart disease, emphysema, and the likelihood of developing lip, throat, and lung cancer.  Despite those concerns and the almost certain knowledge that cigarettes will kill them, they still find it impossible to stop smoking.  In the midst of a health care crisis these people often make a bargain with God that if they can just get through their current emergency, they will quit smoking.  If the good Lord grants them their wish, they generally fail to keep their side of the bargain.

It appears the short-term pleasure of smoking overrides the long-term fear of death.  So, the question is, why can some people quit heavy smoking instantaneously without ever looking back?  In other cased, no matter what the intervention, pleadings of their family, and strong recommendations of their doctor they simply find it impossible to turn away from cigarettes.

We know current science tells us that people addicted to pain medication or alcohol or even gambling, are often not in real control of these urges.  Science tells us these people have a disease, not a character flaw.  Their disease must be treated with intensive therapy addressing any mental health problems they may have, and deeply hidden fears of childhood trauma, or the addiction itself in order to successfully combat their addictive impulses.

It seems to me that people controlled by their impulse to smoke when intellectually they know better perhaps have an addiction as powerful as those consumed by alcoholism or a drug habit.

Social Share Toolbar

“Political Malpractice – How the Politicians Made a Mess of Health Reform”

For information on Stan’s new book, “Political Malpractice – How the Politicians Made a Mess of Health Reform,” follow this link:

Social Share Toolbar