Former President & CEO, INTEGRIS Health

Stan Hupfeld

Will COVID-19 Cause Surge Capacity?

Published in The Journal Record
March 25, 2020

Recently I watched a Trump health official being interviewed on cable news about the supply of ventilators in hospitals.  These machines are vital in the care of Coronavirus (COVID-19) infected patients since respiratory distress is a major symptom of the disease.  The question was, “Could our hospitals exhaust their supply of these machines?”  The correct answer is, “Yes.”  That could surely happen when demand exceeds supply.  The official, however, explained there are plenty of machines ready to be distributed should the infection rate get far worse.  This is, of course, nonsense.

                In her effort not to alarm the public, this expert engaged in health gobbledygook.  Let’s be clear.  Our health system is not designed to handle significant spikes in patient activity due to natural, manmade, or pandemic disasters.  It is designed, staffed, and equipped to address the average caseload that occurs 99% of the time.  In fact, we would not want, nor could we afford, a system with a surge capacity to handle all possible catastrophes.  Such capacity would be frightfully expensive and detract from the mission of addressing the needs of patients who present themselves with the normal vicissitudes of health misadventures.

                This should not surprise us.  There is not a system upon which we rely equipped to expand rapidly enough to address all our needs in a time of widespread panic.    Reflect on how quickly our grocery stores have emptied with the COVID-19 scare.  Our financial institutions have the same limitations.  We expect to be able to withdraw our money from our bank any time we wish.  But if all of us decided to do it at the same time we would be sorely disappointed.  Our money is simply not there.  The banks have lent it out.  Their business model depends on paying an attractive interest rate on the cash we deposit, then turning around and lending it at a higher rate.  The difference in the two rates is their profit. 

                Our whole personal and economic lives are built on the theory of average use rates.  Our sense of equanimity is bolstered by our confidence in our systems.  When we find our store is empty, our gas line is too long, our money not easily available, and our hospital system is stressed to capacity, we must realize it will take leadership both public and private to help us manage difficult times.

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Solving a Dilemma

Published in The Journal Record
February 26, 2020

My parents, particularly my mother, taught me to be polite and deferential to women.  Gestures such as holding the door or a lady’s chair was considered polite and gentlemanly.  As I get older I find it’s not uncommon for women to now hold the door open for me.  I suspect these modest gestures can be traced all the way back to the chivalrous acts of French and English noblemen who were called knights.  Part of their mantra was to display courtesy, kindness, and deference to the opposite sex.  In fact, the word chivalrous gets its meaning from a French phrase having to do with horses since the knights were usually mounted.

For years the tradition in health care was that the poor should be taken care of by physicians and institutions based on their ability to pay.  It would not be uncommon for rural doctors to be compensated by their patients and families with a sack of potatoes or a bushel of peaches.

This began to change as the technology of health care became more expensive and scientifically robust.  For hospitals to attain this new technology they would have to generate a significant amount of cash to make these expensive capital acquisitions.  The technology surrounding health care has become amazingly sophisticated but also amazingly expensive.  The ability for health care institutions to make this technology widely available but also cheap enough for the average citizen to enjoy has disappeared.

The advent of health insurance, both private and governmental, has removed some of the barriers to access, but still wide segments of our population must rely on the generosity of providers when accessing the health system.

So, we are left with a dilemma.  The more sophisticated our health devices, procedures, and training become, the more it becomes out of reach to the average citizen without the help of some external payment system.

To solve this dilemma, it is now suggested that the only humane and reasonable choice is to provide health care to everyone at taxpayers’ expense.  Ultimately, we will be presented with a Hobson’s Choice of providing health care services to everyone while dumbing down technological advances or leaving a significant segment of our population either without the latest innovation or relying on the generosity of the providers’ community.

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Medicare for All – Part II

Published in The Journal Record
January 29, 2020

Last month we learned that President Lyndon Johnson needed help with social conservatives to pass Medicare.  Enter United States Representative from Arkansas, Wilbur Mills.

Mills chaired the House Ways and Means Committee which made him a very influential legislator.  He foresaw the likely possibility that if Medicare were passed it would be but a short time before members of his party would demand something similar for the rest of the country.  He devised companion legislation that was dubbed Medicaid to forestall this anticipated desire to expand Medicare to the entire population. 

Mills did several things that were particularly pragmatic and far-reaching.  He suggested that Medicaid should cover certain categories of the poor, particularly those with the greatest public enthusiasm such as pregnant women, children, and the poor elderly.  In addition, he was particularly clever in making Medicaid a joint federal/state program with the states paying roughly half the cost, but also maintaining control over who and what was covered and what providers  would be paid. 

As would be expected, any government program such as Medicare was likely to be opposed by a conservative coalition of conservative Democrats from the south and northern Republicans.  Anticipating this Mills knew that conservatives love programs where the state had considerable autonomy.  Thus, he was able to pull off a hat trick by aligning Medicare and Medicaid together but allowing the states to have considerable control over Medicaid and  significant leverage in how the program would be managed within their state. 

So, in July 1965 Lyndon Johnson signed both the Medicare and Medicaid programs into law – Medicare, an individual tax supported insurance program for the elderly; and Medicaid, a social welfare program funded by the federal and state governments designed to help certain categories of the poor. 

Today Medicaid covers 59% of low-income children.  States pay, in general, 17% of their general fund into the program.  It covers 60% of nursing home residents and 37% of child births.  Mills, therefore, eliminated until this very point in our history the call to expand Medicare to the entire population.  His artful maneuvering of the political system eliminated the desire for a “Medicare for All” program until today, with the Democratic party clearly moving in that direction. 

We must admit that Wilbur Mills was spectacularly successful in avoiding a single payer system for two generations.

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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.

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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.

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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.

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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.

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Humans versus Machines

One of my favorite television shows when I was a child was Star Trek.  I remember Doctor McCoy waving small hand-held device over the patient and pronouncing solemnly, “Your appendix is about to burst,” without ever touching the patient.  Captain Kirk relied heavily on Dr. McCoy and his magical devices to keep his crew healthy.

Sooner or later the future catches up with us.  One of my heroes in today’s medicine is the radiologist who detects an almost indistinguishable shadow in an x-ray or MRI and pronounces that it is probably a cancerous tumor.  Many lives have been saved because of the expertise of these physicians.

However, futurists are telling us that we are but a short step away (because of Artificial Intelligence (AI)) from a computer that can diagnose these almost indistinguishable shades of dark and light far better than any human, no matter what their training and skills.

Physicians are expected to carry in their minds the accumulated medical wisdom of the ages and recapture those memories at a moment’s notice when coming up with a complex diagnosis for a difficult patient.  Clearly the technologists tell us that machines will be able to do it far better.  Not only will they be able to detect the vagaries of human illness far quicker and with more accuracy than any human, they will have predictive capabilities that mere mortals can only dream of.

If all of this is in our future, how do we feel about it?  Are we willing or even anxious to have AI computers make medical decisions formerly reserved for the most learned of physicians?  In the future, will the conclusions of the medical profession be the final arbiter and override any computer diagnosis, or will the opposite in fact be true?  So, if physicians of the future do not rely on AI, will their best judgement be countermanded by a computer-driven solution?

Frankly, I’m not sure how I feel about this future.  Then again, I’m of a generation that grew up putting its entire trust in the decisions of our doctor. I can remember my pediatrician sitting on my bed at my home assuring my mother that whatever malady had befallen me, I would recover. 

Even if these predictions of the preeminence of AI are true, it never will replace the confidence my mother had in that pediatrician.

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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.

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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.

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