Teaching Hospitals Tackle Rising Costs of Uninsured Care

By Suria Santana

John Stobo, M.D., UTMB president and CEO

When the founders of the University of Texas Medical Branch (UTMB)-Galveston first opened the institution's doors in 1891, they took on a mission that most teaching hospitals are familiar with: treating the medically underserved.

For the last 110 years, low-income patients from all areas of Texas have relied on UTMB's services, often making the trip to the hospital from distant regions. Despite the institution's historical mission, its CEO had to make a drastic decision six years ago by curtailing services to the indigent.

"The situation was simply unsustainable," said John Stobo, M.D., UTMB president and CEO. In 1998 UTMB had indigent care costs in excess of $260 million with 37 percent of its patients lacking health insurance and being ineligible for government assistance. Many of the uninsured treated at the hospital did not pay their bills, according to Dr. Stobo.

Most teaching hospitals are familiar with this scenario. Despite government health programs providing coverage to the lowest rung of the low-income population, a substantial amount of the poor is ineligible for coverage. Recent cuts in public health programs and rising healthcare costs have put many teaching hospitals' budgets in the red.

"By 1998, a series of things had conspired to challenge our ability to continue to [provide indigent services] at the level that we had done in the past," Dr. Stobo recalled. "The Balanced Budget Act, Medicaid cuts, increases in biomedical inflation and an increase in un-sponsored (uninsured) patients of 10 percent a year over three straight years."

After taking inventory and conducting an analysis of the institution's performance in relation to its missions, the hospital's administrators decided to implement a program in 1998 that became known as "DAMP" (Demand and Access Management Program). They closed a few beds and services and started cutting back on uninsured patients' admissions.

Under DAMP, all patients have been required to undergo financial screening and pay a fee before seeing a doctor. In addition, uninsured patients have not been granted access to some of the more expensive drugs and are not allowed to undergo very costly treatments.

The extreme methods ended up helping UTMB's bottom line. "In the following year, we were back in the black," Dr. Stobo said.

The financial recovery has continued. Whereas six years ago UTMB was headed for an $80 million deficit, it posted a small surplus last year.

"We have tried to do this as humanely as possible, given that what we are trying to do is not necessarily humane and compassionate," said Dr. Stobo.

Although Galveston's situation is not much different from other teaching hospitals, the concept of "rationing care" has not been widely adopted.

Tweaking the Sliding Scale

Teaching hospitals across the nation have responded differently to the problem posed by an increasing uninsured population.

Yale-New Haven Hospital (YNHH), located in one of the nation's poorest cities, serves a substantial number of indigent patients. The hospital encountered difficulty in getting some of its uninsured patients to pay their bills. Last year, YNHH spent nearly $60 million caring for its uninsured and underinsured patients, more than four times the average Connecticut hospital. Officials decided a new approach to treating the uninsured was essential to offset rising costs.

"Last year, we had adopted a comprehensive program designed to care for uninsured and underinsured patients," said Vin Petrini, YNHH's senior vice president of public affairs. "We introduced a new threshold through which people could apply for free care, establishing it at 250 percent of the poverty level."

But after reviewing the program a few months later, the hospital's admin-istrators decided to further refine the charity care policy. "We recognized that there are many people who would face financial challenges [paying for services at our hospital], especially those without health insurance who were at the higher income levels," Petrini said.

So YNHH closed nearly 4,000 patient accounts with outstanding balances, removed the vast majority of liens placed on properties and eliminated the initiation of foreclosure proceedings.

Last March the institution announced that a new sliding scale program qualifying anyone between 250 and 350 percent of the poverty level for discounted care would come into effect. A family of four earning approximately $47,125 a year is at 250 percent of the poverty level, whereas a family of four earning $65,975 is at 350 percent. Anyone at or below 250 percent could qualify for free care.

Under the new sliding scale, qualifying patients were eligible for a 50 percent reduction in charges, Petrini said.

"The challenge of paying for the care of the uninsured and of those with inadequate insurance coverage continues to grow, placing extraordinary pressure on these individuals and on the entire healthcare system," said Joseph Zaccagnino, president and CEO of YNHH. "We view this as another positive step forward in enhancing our already significant practices of providing care to all patients, regardless of their ability to pay."

Efforts to help the uninsured by refining charity care policies and "tweaking" the sliding scales have occurred in other states. The Florida Hospital Association has backed legislation requiring a mandatory minimum discount of 30 percent to all uninsured patients, up to 300 percent of the poverty level. Despite support from the hospitals and Florida Governor Jeb Bush, the legislation did not pass.

According to Richard Rasmussen, FHA's vice president for strategic communications, the legislation would give uniformity and consistency to Florida hospitals' charity care policies, many of which vary from institution to institution.

Last March, the Illinois Hospital Association (IHA), another organization representing the state's public, private and teaching hospitals, reached a deal with the Service Employees International Union that gives free care to uninsured families with incomes up to $18,850 a year. The deal has been codified into an amendment for a proposed senate bill. At press time the Illinois legislature had not yet acted on the legislation.

Building Awareness

Besides modifications in their charity care policies, medical schools and teaching hospitals have found multiple ways to address the uninsured problem, ranging from participating in national awareness campaigns to implementing local medical student projects.

An example of a related initiative is "Cover the Uninsured Week" (CTUW), a Robert Wood Johnson Foundation campaign that aims to increase healthcare coverage in the United States. Academic health centers across the country have participated in CTUW since its founding two years ago with the help of national groups like the AAMC, the American Medical Student Association, the American Medical Associa- tion-Medical Student Section, the Association of Schools of Public Health, the American Association of Colleges of Nursing and the Association of Academic Health Centers.

The most recent CTUW took place last month, offering a variety of activities that included lectures, discussion panels, candlelight vigils, public forums, press conferences and marches. A number of institutional leaders submitted editorial articles to local publications.

UTMB has participated in the campaign since 2002.

"We are trying to get our county to increase the sales tax by about one penny to provide an additional $12 million for indigent healthcare in Galveston," said Dr. Stobo. "We had a march downtown [as part of the Cover the Uninsured campaign] to bring that about two years ago."

Working Solutions

Besides participating in national campaigns, academic health centers have been able to boost their communities' indigent care services through grass-roots student and faculty projects.

At the University of California-San Diego (UCSD) faculty and students have developed a community project that does just that. The UCSD Student Run Free Clinic Project debuted seven years ago, starting out as a small room inside a church and eventually growing into a network of three sites.

As part of the program, participating students and faculty partnered with community groups that serve the area's indigent communities, according to Ellen Beck, M.D., director of community education for the division of family medicine at UCSD.

"Our first site was founded in coll-aboration with a group that was doing really excellent work with the homeless," Dr. Beck said. "The second one was developed when a church that also does work with the underserved approached us to start a clinic. And our third site is located in an inner-city elementary school."

Medical and pharmacy students, supervising faculty physicians, community members and a handful of administrative staff run the three clinics. UCSD's medical school provides funding to pay for staff salaries, but most faculty and students work in the clinics on a voluntary basis or as part of elective classes.

"We offer primary care outpatient services, assessment and management of urgent conditions, and chronic disease management," Dr. Beck said. The clinics also offer counseling services to help patients determine if they are eligible for government assistance or free county medical services.

The largest group they serve is the working poor, people who earn too much to qualify for government assistance and who do not receive insurance through their employers. They serve quite a few undocumented families and the homeless, according to Dr. Beck.

Another UCSD program that counts on Dr. Beck's leadership is a fellowship called "Addressing the Health Needs of the Underserved."

"A couple of times a month I go out on the streets with a couple of medical students, a former homeless man who is our guide, a social worker and an intern in social work," she said. "We help homeless people medically, by assessing their situation, helping them in the moment, and referring them to our clinics or other medical and social programs."

She thinks that medical schools and teaching hospitals' projects instill values in students that could contribute a solution to the uninsured crisis. "Until we come up with a solution at the national level, these pockets of service really keep these values alive," she said.

Dr. Stobo agrees.

"It's important that academic health centers around the country address this issue and not wait for it to be solved at the political level," he said. "Unless we use the same intellect and innovation to address the health needs of the uninsured that we have brought to our education and research missions, there's nothing in the immediate future that is going to address the issue. It's only going to get worse."

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