Jan Jennings

Is the UPMC Board of Directors Aware of their Fundamental Responsibilities?

There is no question that Pittsburgh and Western Pennsylvania are richly blessed to have one of the top ten academic medical centers and associated hospital systems in the United States. Last year I observed with wonderment the acquisition of two intercontinental jets to fly the imperious leadership of UPMC to visit their international assets. So far we have been informed that UPMC operates a transplant center in Palermo, Italy; two cancer centers in Ireland and a partnership to provide emergency care in Qatar.


On February 29 it was reported that UPMC is now under contract to manage a hospital in Ireland. This strikes me as odd. As an Irish-American, like most of my kin, I would do anything for Ireland but live there. Notwithstanding, why is it necessary for UPMC to devote one scintilla of time and attention to manage a hospital in Ireland?

With the accounting systems unique to American hospitals, UPMC now has free cash per annum somewhere between $650 MM and $1 Billion per year. Okay, I may be off $100 MM here or there. However, every single dollar that has been paid to UPMC, directly or indirectly, was paid by the citizens of Pittsburgh and Western Pennsylvania.

The last time I checked, UPMC is a not-for-profit, tax exempt organization. This is a marvelous advantage in the market place. It is an advantage not extended to organizations like Alcoa, Heinz, National City Bank or the local barber. Why? The tax exemption is awarded to charitable organizations to improve the health status and the quality of life in their immediate communities.

There is a related, but somewhat different argument for the University of Pittsburgh, School of Medicine. There is an unwritten convention that medical science, as it is expanded, is to be shared freely for the benefit of all mankind. Jonas Salk did not sell the polio vaccine when it was developed at the University of Pittsburgh. It was a gift to the entire world.

No, my concern is on the hospital delivery side of UPMC. Is it in their mission to manage, build or buy hospitals outside the United States? If UPMC wants to extend its expertise outside the United States, why not focus those talents where it is needed most, the third world. I think we know the answer. It is the responsibility of the U.S. State Department and the related U.S. A.I.D. Program, the United Nations, the World Bank and other international agencies and religious organizations to improve the fragile health care delivery system around the world.

For many years the community benefited from a beautiful restaurant on the top of the U.S. Steel building. My understanding is the restaurant finally reached the point they could not afford the rent. Mr. Jeffrey Romoff is the current occupant of the top floor of the U.S. Steel building. UPMC seems to be able to afford anything. They can afford to build a transplant hospital in Italy, cancer centers in Ireland, manage a hospital in Ireland, provide emergency services in Qatar and international jets to flit around the world and God knows what else they are involved in.

Here is a challenge to the Board of Directors of UPMC. Rather than revel in its top ten status (U.S. News and World Report) how about investing excess cash to be the number one health system in the United States? For all of the television advertising, billboards, international investments and profligate spending, in what categories is UPMC truly number one. Is it patient safety and error free care? Could UPMC invest further in the University of Pittsburgh, School of Medicine to enrich the education and research infrastructure? The answers to these questions are above my pay grade. One thing is certain, if UPMC was the greatest and not just great, every dollar would be invested in Pittsburgh.

Emblematic of these concerns are current events reported in the Pittsburgh Tribune-Review. In a previous generation of leadership at UPMC, Dr. Thomas Detre, was successful in recruiting Dr. Thomas Starzl, perhaps the greatest solid organ transplantation surgeon in history to Pittsburgh. Dr. Detre was based in Oakland at the University of Pittsburgh. He did not have international jets at his disposal, he was not distracted by a health insurance company, nor did he have a transplant hospital built in Italy with Pittsburgh money. The solid organ transplant program at UPMC and the University of Pittsburgh, School of Medicine was the envy of the world.

A board member of UPMC said to me recently, “You have to hand it to Jeff Romoff. He really recruits first rate talent.” Is that so? UPMC and the School of Medicine attempted to replace a nearly retired Dr. Starzl with a transplant surgeon of questionable personal and professional qualities from a “B” level academic medical center (University of Rochester). The solid organ transplant program is now in a state of disarray. The University of Pittsburgh went from the number one solid organ transplantation center in the world to some lower level. This has occurred in an era in which UPMC has the money to be number one in every medical and surgical category in the United States. Is it possible that the Board of Directors of UPMC is anesthetized to clearly discern the extant circumstances? To an outsider, it appears that the focus to be the very best has been lost. Dr. Detre was not pampered in an aerie atop the U.S. Steel Building. He was in Oakland. He was focused on bringing international respect to the University of Pittsburgh and UPMC in Pittsburgh, Pennsylvania.

I do not criticize Mr. Romoff. He derives his authority from a board of directors that governs UPMC in ways that are startling. To quote an anonymous community leader, not invited to serve on the UPMC Board, “It is like they have turned the monkeys loose to run the laboratory.” What are they thinking? Would Dan Rooney build a football stadium in Beijing just for fun? I believe he is on the board of directors of UPMC and it appears that he keeps his investments pretty close to home. The same could be said for the other directors of UPMC. Does PPG build unneeded glass factories in Italy or Ireland or Qatar on a whim? I think not. Does National City Bank build banks in Europe just to see how they might do abroad? These questions seem just so silly. Not silly to UPMC. They seem to have more money than good sense. The Board of Directors gathers periodically and approves projects that will eventually draw attention like a bright light on the appropriateness of their tax exempt status. By the time the Justice Department and/or the Pennsylvania Attorney General catch up to this nonsense, Jeffrey Romoff will be retired and giggling.

You do not have to look far to find a hospital that missed the mark with respect to their primary responsibilities. The Hamot Medical Center in Erie, Pennsylvania lost their tax exempt status in 1989 for trying to improve the community by developing housing in downtown Erie. The episode dragged the organization through hell and back before they could have their tax exempt status restored. Excuse me, but their adjudicated malfeasance seems rather tame to the multi-national ambitions of UPMC.

It is altogether possible that when Mary Beth Buchanan, United States Attorney for the Western District of Pennsylvania finishes chasing every petty criminal in Western Pennsylvania she may turn her attention to more serious issues, like this one.

UPMC made a $100 million contribution to the Pittsburgh School Board. Wow. Now that is hard to criticize. On the other hand, is it the responsibility of UPMC to fund public education in Pittsburgh and Western Pennsylvania? Some, perhaps more cynical than necessary, thought the gift was a ploy to avoid paying UPMC’s fair share for fire safety, law enforcement, public works and other services in lieu of property taxes.

The way the organization is being governed is going to bait an enterprising elected official or law enforcement agency to raise the following question. Maybe UPMC should lose its tax exempt status if they can dabble in the international for-profit hospital market? Maybe UPMC has run out of ideas regarding the improvement of the health status of Pittsburghers and the other residents of Western Pennsylvania.

Beyond doubt, UPMC has paid good money to one or more of the best law firms in the United States to “paper the file” that everything they have done has been done in accordance with prevailing law. However, when the Justice Department pulls into town with an army of salaried attorneys, that “advance legal wall of defense” will go limp like a wet piece of white bread. There are several cases being litigated around the United States far less interesting than the extant circumstances at UPMC.

Someone asked me, “How does Jeff Romoff get away with such shenanigans?” Here is the answer. He is allowed to. It is like the question, “Why do people steal?” The answer is that they do not get caught . . . at least for a while. Sooner or later there is always a day of reckoning. Clarity of thought will catch up to the UPMC Board of Directors. It might come from Senator Grassley, R-Iowa (deeply concerned about tax-exempt abuses), or it might come from the Internal Revenue Service or it might come from the Justice Department or it might come from somewhere else. Have no doubt. The development of hospitals outside of the United States and corporate jets with dollars contributed to UPMC by the citizens of Pittsburgh and Western Pennsylvania will be stopped. When these reforms come, people will say, “How did this happen in the first place.” Here is the answer. No one got caught . . . at least for a while.

Of course, these are merely my opinions. You may have a completely different point of view. Let me know.

Jan R. Jennings

JJennings@Americanhs.com

Three Trends Converge to Propel us into Universal Healthcare Coverage

Healthcare leaders have been predicting universal healthcare insurance for at least the past twenty-five years. It has been a long vigil and it we will probably wait longer. It was only in the last few months that the forces that will propel us into universal healthcare insurance have become clear, at least to me.

1. The economic pressure of caring for the uninsured – Some of our best clients are now caring for up to 15 percent of their patients in a category known as “self pay.” This is a euphemism for uninsured or under-insured. These so-called “self pay” patients can equate to less than one percent of cash receipts to a hospital or health system. To provide an example assume a hospital provides identical care to 100 patients. 15 of those patients pay less than one percent of the cost to care for the entire 100 patients. We see many hospitals and health systems installing the most elaborate management systems to squeeze every nickel out of hospital budget in an effort to breakeven from hospital operations. These are hospitals that have historically shown four to six percent of revenue in excess of operating expenses. At the moment, this trend is highly variable from one community to another. To the extent that this trend increases and becomes a national norm, the hospital industry will be emboldened to scream for help in a manner never experienced in our history.

2. The Federal Budget - One of my favorite hospital CEO’s is a Marine Corps Officer. He recently said to me, “No one could question my patriotism, but our $9 trillion national debt and $ 12 billion per month for the war is going to eventually have to be paid for and you know where Congress will look first?” For all of our protestations regarding the Balanced Budget Act of 1997, the medical and hospital industry survived. It is not clear to the public or the members of Congress that Medicare and Medicaid cuts might be harmful to the healthcare industry. It is just a matter of time before the healthcare industry will face a Federal Balanced Budget Act II or Act III or Act IV. Eventually, the bone marrow of the healthcare industry will be ruptured and lead to the third and most disturbing force for change.

3. Elevated Quality Standards will Fail –We have all read about one medical disaster or another. In the past, each of these errors has been attributed to medical errors or the most elemental human mistakes. Many of these errors have occurred at our nation’s finest medical institutions. During the past twenty years there has been an explosion of interest in elevating quality of care standards. People like Dr. Donald Berwick have convinced us that we can avoid human error and improve the care provided within the American hospital. This ethos is under-girded by one simple assumption: the healthcare delivery system has adequate money. I am a believer. However, it is altogether possible that an under-funded medical and hospital system will begin reporting medical disasters on a par with the national “death-o-meter” of wartime statistics. What will the public reaction be if fifteen years from now the American Hospital Association begins issuing a weekly report with headlines like the following, “Last week 93 people died in American hospital emergency rooms due to excessive waiting times.” It is altogether possible that an under-funded healthcare system will voluntary ration elective surgeries as life threatening cases have to be handled first. Will the life threatening cases be handled in a timely manner? Of course, there will continue to be wide variability with respect to which hospitals are most adversely affected.

As these three trends fully mature, there will be period of placing blame. When American people are being injured or worse in American hospitals, regardless of their insurance status and despite the best efforts of physicians, nurses and hospital leaders, it will be hard to argue against a level playing field for all Americans. If the American hospitals are uniformly under-funded, the problems that emerge will not be isolated to St. Smither’s by the Swamp Medical Center in Broken Arrow, Oklahoma. Under-funding any complex system does not discriminate on any basis. An engine without oil will destroy a new Lexus just as fast as a used Yugo.

I asked my most trusted reviewer of my articles to review this one. He openly wondered if I was being a little melodramatic predicting that medical and hospital care is going to fall off a cliff or “was I just having a bad day.” Well, you tell me. I see these changes coming with the speed of a turtle and immutable. My adverse vision is way off in the future. I have no idea how long it will take for routine crashes in American hospitals to occur. I would ask the informed reader this simple question. Do you see a single countervailing force to reverse any of the three trends suggested above?

At the moment, five out of six American people have some form of health insurance. When that number gets to four out of six or three out of six and the Federal budget chisels the life, literally, out of the American hospital, medical disasters will become normative. No pun intended, the American public will not take this lying down. We are likely to see a state experiment that works. Currently, we are watching the “Massachusetts experiment” carefully. The early signs are not promising. Stay tuned. Many innovative proposals are out and about.

Our universal healthcare system is likely to be extremely private. The Federal and state governments will continue to contribute to a system that is competitively bid among private health insurance companies. We will likely catch up to world powers like Mexico and competitively bid our pharmaceuticals when public dollars are involved. Ironically, it is from the politically ambitious that we are likely to find the champions for universal healthcare insurance. When people die routinely and unnecessarily in American hospitals it will be expedient to be a legislative hero.






Jan Jennings

The Missing Face of the Uninsured

On this last day of January, 2008, I was tasked with the pickup up a prescription for a dear old friend. It could not have come at a worse time. I was struggling to meet a timetable to catch an airplane out of town.

I stood at the “prescription pickup” station at the pharmacy and I waited and I waited. When I inquired, “what is the problem”, it was revealed that the pharmacy computer was having difficulty chit chatting with the health insurance computer and approving partial payment for the medications prescribed. Finally, I asked if I could pay cash for the medication and let the computers fight it out in the days to come. Well, nothing speeds up a transaction like cash. The bill for thirty pills was $159.95. I was a little surprised at the price and asked the pharmacy technician if she ever had patients show up with a prescription without insurance and when faced with the price, turned down the medication. She looked at me straight into my eyes and said, “Mr. Jennings, every morning, every afternoon and every evening.”

Upon further questioning she shared with me that patients routinely turned down insulin to battle diabetes, diuretics to fight congestive heart failure and routine medications to control high blood pressure, to name a few. Of 300 million U.S. citizens, nearly 50 million have no health insurance. One in six Americans face choices the majority of us find unthinkable. Who are these people?

We provide Universal coverage for streets and highways. All 300 millions Americans have access to our road system. It is considered a public utility. Even if you do not have an automobile, you can walk along the highways and byways of America. We have chosen as a society not to refer to this reality as socialized highways. Our society views highways as a service that all citizens should have made available to them and road construction companies compete for the business and are paid to build and re-build these highways for our individual and collective benefit.

Would it not make sense for America and Americans to find a way to pay pharmaceutical companies to provide medications that promote life, health and improve the quality of life for all of our citizens? For American business, would this not improve productivity, reduce lost work days and serve the interests of business and industry. There is someone out there in cyberspace that will read this and accuse me of being in favor of socialized medicine, a new expletive in our lexicon.

Rotary International provided universal access to polio vaccine to every person in the world. They raised the money on their own and developed a distribution system for polio vaccine to essentially eradicate polio throughout the world. If you have ever attended a Rotary meeting, you would not come away from the experience thinking of these men and women as wide eyed flaming liberals or socialists. They saw an opportunity to improve public health throughout the world and filled a long standing international leadership void.

Where will the leadership come from to provide healthcare to our citizens as a public utility? I have no interest in socialized medicine. I am not even certain what that term means. It strikes me that our friends throughout Western Europe have found numerous models to finance medical care in ways that are universal and at the same time extraordinarily private. This subject frequently causes people to start yammering about the Canadian Healthcare System. I can honestly say that in almost forty years of service to the American healthcare delivery system I have never met one person advocate that America follow the lead of Canada in anything but hockey.

My guess is that the leadership will emerge to bring common sense to this issue. It is not American for many of our best citizens to be embarrassed in American pharmacies; to shrink away in embarrassment because they cannot afford a simple medication to enrich or extend their lives.

Jan R. Jennings