2003-09-25 -- Rationing in a State-Supported Hospital

Wall Street Journal, September 23, 2003

At One Hospital,
A Stark Solution For
Allocating Care

Galveston Facility Cuts
Drugs and Treatments
for the Uninsured

By BERNARD WYSOCKI JR.  Staff Reporter of THE WALL STREET JOURNAL

GALVESTON, Texas -- Joan Richardson, chief medical director at the
hospital of the University of Texas Medical Branch, faced an agonizing
decision: Should she approve a $1,500 drug for a 52-year-old woman
with metastatic breast cancer?

The patient had no money, no insurance and rapidly fading hope. Three
powerful cancer drugs had failed to help her. A fourth, exemestane,
offered a slim chance, but strict rules at the hospital barred the
drug from being given to patients who couldn't pay for it. Dr.
Richardson would have to authorize the money to come from a
$25,000-a-month drug fund for indigents -- meaning some other poor
person who needed a costly drug might not get it.

The 59-year-old Dr. Richardson, who sports a spiky hairstyle and a
west Texas twang, approved just one exemestane treatment. "Unless this
patient really improves, this is the end of the road," she said. The
hospital says it's too early to tell if the drug is working.

The rules restricting drugs at this 795-bed hospital are part of a
bold experiment in allocating health care at a time of rising costs.
In most other U.S. medical centers, decisions about who gets scarce
resources such as expensive drugs and surgical procedures are often
made on an ad hoc basis -- with few formal guidelines for doctors and
nurses on how to help their patients while hewing to budget
restrictions.

But UTMB, as this state-supported hospital is known, has developed a
detailed playbook to help determine exactly who gets treated and who
doesn't. Its rules require that patients undergo financial screening
before they can be admitted and that virtually everybody pay a fee
before seeing a doctor. For patients who are poor or uninsured, the
rules restrict or proscribe the use of certain drugs and treatments.
Some procedures are barred outright -- such as hyperbaric oxygen
treatments, which are widely used at other hospitals to help wounds
heal. The system empowers certain decision makers, such as Dr.
Richardson, to make exceptions to the rules, but usually within a
specific budget.

Unlike most hospitals, UTMB is also blunt about its need to limit some
services on financial grounds. "We are rationing," says John Stobo,
UTMB's 62-year-old president and chief executive.

The hospital's rationing system -- dubbed "DAMP" for "Demand and
Access Management Program" -- has helped its bottom line. Five years
ago, UTMB was headed for an $80 million budget deficit. Last year, it
posted a modest budget surplus. But the rules have hit its hometown
hard.

UTMB, a sprawling complex that includes a medical school and a nursing
school, is the only hospital in Galveston, a port city of 55,000 that
has fallen on tough times. Under the rationing rules, UTMB has cut
back on admissions of uninsured patients, who are then forced to defer
or forgo treatment. Before DAMP was instituted, in 1998, about 26% of
UTMB's patients were uninsured. Today, that figure is 17%. In the
hospital's emergency room -- which by federal law can't turn away
anyone who claims to need immediate care -- the waiting time has
stretched to as long as five hours or even longer.

Hospital officials say they had little choice. In the late 1990s,
uninsured patients were overwhelming the institution, and many didn't
pay their bills. UTMB, which was established in 1891 with a mission to
care for the poor, was also swamped by waves of low-paying patients
covered by Medicare, the federal program for the elderly, and
Medicaid, the state-federal program for the poor and disabled. In a
message to the staff posted on the hospital's Web site in 1998, Dr.
Stobo warned that UTMB would have to restrict care for the indigent or
become indigent itself.

At first, Dr. Stobo, newly recruited from a top job at Johns Hopkins
University School of Medicine in Baltimore, reduced costs the
traditional way: He fired staff and mothballed beds. When he felt he
could cut no further, he took a more-radical step. He appointed a
committee of administrators, doctors and midlevel staffers to codify a
top-to-bottom system for distributing services -- with limits that
could be consistently applied.

The committee, which came up with the acronym DAMP, set rules that
start at the front door: People without insurance must pay $80 before
they can see a doctor, unless they can prove they are indigent --
meaning they earn less than $2,800 a month for a family of four, which
is 185% of the federal poverty level. In that case, they qualify for a
discounted fee of about $30, depending on their county of residence.
The discount is also given to dependents, and UTMB rules stipulate
that children will never be turned away. But otherwise, anyone who
shows up at UTMB without the money is sent home, unless a doctor deems
them sick enough to be seen immediately.

Under the rationing scheme, the first cut is made by people such as
Roslyn McCray, one of 17 financial screeners who scrutinize the income
and insurance of everyone seeking treatment. One afternoon earlier
this year, Ms. McCray sat in a tiny office near the entrance to the
UTMB outpatient clinic and called up the computer records of John Paul
Regini, a 48-year-old, unemployed welder's helper who sat across from
her.

It was the second attempt by Mr. Regini, who is uninsured and doesn't
qualify for Medicaid, to see a UTMB doctor. Two months earlier, he had
been referred to a UTMB internal-medicine specialist by a county
health clinic, which had diagnosed him with high blood pressure. He
showed up without the upfront fee. The screener he saw at the time,
one of Ms. McCray's colleagues, suggested that Mr. Regini try to prove
he had little or no income in order to be eligible for the discount.
Then she suggested a way how: Get a notarized letter from his mother
stating that she supported him. Before he was sent home, a doctor
reviewed his file, as UTMB rules require, and concluded his situation
wasn't urgent enough for him to be seen immediately. In cases where
patients don't have the upfront fee, a nurse makes a quick assessment
and then presents the findings to a doctor. UTMB doesn't reveal
details of these doctor-patient interactions, citing laws protecting
patient confidentiality.

Now Mr. Regini was back with the notarized letter and $30, and it was
up to Ms. McCray to determine whether the document was sufficient
proof that he was a dependent. "Is this still your phone number?" Ms.
McCray asked. "No, that's my mom's," replied Mr. Regini, a strapping
man in blue jeans. She decided the letter looked legitimate and
approved his appointment to see a doctor later that day. Mr. Regini
says he was diagnosed with excess iron in his blood and is awaiting
further appointments.

Ms. McCray, the 39-year-old daughter of a nurse and a machinist, has
been a UTMB employee for 15 years, and says she often shows patients
how to sign up for Medicaid or for another federal-state program that
aids families whose incomes are above Texas's very low Medicaid
ceilings. But she's also on the lookout for people who falsely claim
to be indigent. "They come in with diamonds and wearing Saks Fifth,"
she says.

UTMB also has strict rules for patients who have failed to pay a
previous bill, causing a "bad-debt flag" to pop up on the hospital
computer. These patients -- currently a staggering 64,000 people, or
7% of those in the hospital's records -- are barred from making an
appointment with a doctor unless they qualify as indigent under DAMP
rules, or a doctor deems their case urgent.

On a recent day, Ms. McCray reviewed the bank statements of a
southeast Texas couple who had mailed them in to try to prove they
were indigent and remove a bad-debt flag. The wife wanted to make a
follow-up appointment after a gastrointestinal endoscopy, at her
doctor's recommendation, but she owed $1,300 for the procedure. This
time, Ms. McCray wasn't persuaded. The bank statements alone didn't
show that the couple's monthly income was under $1,800 -- DAMP's
ceiling for indigent status in their case. Ms. McCray mailed back a
request for more financial information.

As a result of UTMB's financial screening, some poor, sick people are
deterred from seeking or getting treatment. Phyllis Kinsey Scothorn,
57, who underwent surgery at UTMB for a heart attack in August 2001,
has troubling symptoms but can't make an appointment at UTMB because
of an unpaid bill of $869.

"I'm losing sensation in eight of my 10 fingers," Ms. Scothorn said.
"I feel burning sensations in my arms." At the time of her surgery,
Ms. Scothorn's then-husband's insurance covered most of her bills, but
she lost coverage after her divorce. Earlier this year she visited a
Galveston County clinic that serves the indigent, where a general
practitioner referred her to cardiac and neurologic specialists at
UTMB, but she was barred from getting those appointments, she says.

Sitting with her new husband, retired bus driver Keith Scothorn, in
their tiny living room in Santa Fe, Texas, Ms. Scothorn dialed the
UTMB billing office and described her illness, adding that she had an
application pending for Medicaid and Medicare. The UTMB billing
staffer told her the bad-debt flag would be removed from her account
if she sent in a signed letter promising payment of $50 a month.

"So that's what your life is worth -- $50 a month?" Mr. Scothorn
asked. He said they couldn't afford it. The couple's sole source of
income is the $600 monthly pension that Mr. Scothorn, 66, draws from
his home country of Britain. He lacks U.S. health insurance and has
untreated medical problems of his own. Ms. Scothorn said she hasn't
gone to the UTMB emergency room because she knows she will get bills
she can't pay. It's also a matter of pride. "It's very hard for me to
say I need [financial] help," she said. A hospital spokesman says, "We
work with patients to help them develop a payment schedule. Once we
and the patient have agreed on the terms, we schedule additional
visits."

Before the rationing program started, the UTMB pharmacy often gave
away drugs to poor Texans, many of whom drove hundreds of miles to get
them. In 1998, the pharmacy posted a loss of $12 million, and a
crackdown on drugs soon followed. A committee established a
"gatekeeper" list of expensive drugs, requiring doctors to get
approval from high-level faculty members before they could be used.

A few drugs -- such as Xigris, Eli Lilly & Co.'s more than $6,000
medication for sepsis, a deadly syndrome associated with severe
infections -- were so tightly restricted that only Dr. Richardson, the
chief medical director, could approve their use. Some commonly
prescribed drugs were also put off-limits, such as Detrol, an
$85-a-month, long-acting incontinence medication. UTMB patients who
can't afford it are prescribed a shorter-acting bladder-control
medication instead.

Despite the restrictions, the UTMB pharmacy posted a loss of $2.8
million in 2001. Karen Sexton, the chief operating officer, proposed
closing the pharmacy's outpatient service. After raising objections,
the pharmacy director, Kim Sergeant, suggested raising the amounts
patients must pay and discharging some uninsured patients with a
14-day supply of drugs instead of a 30-day supply. That rule was
adopted, and the pharmacy met Dr. Sexton's goal of narrowing its
losses by $1 million last year.

Dr. Stobo, the UTMB president and chief executive, briefly considered
abandoning the hospital's mission to care for the poor and focusing
instead on its research strengths in tropical medicine, environmental
health, AIDS research and other specialties. But he quickly rejected
that idea. "Taking care of vulnerable populations is what we've been
doing for 110 years, and we're good at it," Dr. Stobo says. "Let's
have the intestinal fortitude to stay the course."

In February, the state of Texas, facing a multibillion-dollar budget
deficit, forced UTMB to reduce its state-funded budget by $12 million
over the next six months, with further cuts of about $50 million
likely in 2004 and beyond. UTMB gets about $289 million in annual
funding from the state, out of an overall budget of $1.2 billion. UTMB
is upgrading its intensive-care units, pediatric care and other
programs, but with the budget cutbacks looming, Dr. Sexton began
drawing up a list of possible programs for elimination.

Cochlear implants, which can restore hearing to the deaf in 60% to 80%
of cases -- but cost a total of about $78,000 and are only partly
reimbursed by even the most generous insurance plans -- were among the
procedures she targeted. Under existing UTMB rules, only patients who
paid for the implant devices themselves, which cost about $20,000,
were allowed to receive them. Dr. Sexton believed doctors were being
lax in enforcing DAMP rules and were giving implants to too many
patients who couldn't pay for them.

In March, as Dr. Sexton weighed whether to eliminate the program, she
went for a walk on the hospital grounds and struck up a conversation
with a mother whose child had come to be examined for a cochlear
implant. "I was crying by the time I got to the front door," she says.
Meanwhile, the chairman of the otolaryngology department argued that
cochlear implants offered disabled people the hope of a normal life,
and he promised strict adherence to DAMP rules.

Dr. Sexton, a registered nurse with a Ph.D. focused on nursing care,
struggled with her decision. But she believed that as long as UTMB
carried an inventory of implants, sympathetic staff would be tempted
to keep doing procedures for nonpaying patients. She halted all
cochlear implants.

Wrestling with these issues is "frightening," she says. "We're talking
about losing muscle, not fat."

Dr. Richardson, the chief medical director, also wrestles with the
responsibilities of rationing. When the new rules were established,
she arranged for a special fund to pay for drugs that were put
off-limits to poor patients. To get them, doctors must request waivers
from Dr. Richardson on paper or via e-mail. She also has authority to
approve special "teaching waivers" for expensive procedures that might
provide useful experience for medical students.

Striding to her office one recent day, she pulled several waiver
requests from the pocket of her white hospital coat. One was for a
36-year-old man on the waiting-list for a heart transplant who needed
a $100-a-month blood thinner. The patient's government disability
payments cover many of his expenses, such as a device to help his
heart pump, but not the drug. Dr. Richardson, a pediatrician who has
spent most of her career at UTMB, approved the $100-a-month drug
waiver. Her reasoning: UTMB had already expended so much money getting
the patient ready for a transplant that it made no sense to stop
treating him.

In some cases, she uses cost-benefit analysis. Among Dr. Richardson's
duties are managing patient flow, and because about 100 new inpatients
are admitted every day, 100 must be discharged. She quickly granted
one doctor's request to prescribe a 14-day supply of an antibiotic
called Levaquin, calculating that it was well worth its $125 tab
because it would allow a woman with pneumonia to go home in a day or
so -- and free up a hospital bed for which the hospital could charge
$800 a day.

She made a different decision on a request for four cases of the
nutritional supplement Ensure for a severely underweight patient who
had recently undergone bowel surgery. The cost of the supplement was
several hundred dollars. Shaking her head, Dr. Richardson said, "The
person can get Carnation Instant Breakfast for a whole lot less." Dr.
Richardson says the substitution resulted in little or no loss in
nutritional value.

When she can, she compromises. Recently, a patient who underwent a
kidney transplant needed a $4,500 medicine to stave off infection. The
patient's operation was covered by Medicare, but the drug, called
valganciclovir, wasn't. "I cut a backroom deal with the patient," Dr.
Richardson says. She says she agreed to cover half the price of the
drug from her special fund, provided the patient paid the other half.
"I tried to help him, but I didn't want to break the bank."

Lately she has been forced to say no to some procedures involving
illegal immigrants. Before the rationing regime, UTMB sometimes
absorbed the cost of expensive, nonemergency care for such patients.
"The issue was not, 'Can they pay?' or 'Are they a citizen of this
country?' " Dr. Richardson says. Today, UTMB's policy is to stabilize
such patients, but to avoid protracted treatment.

Not long ago, a 61-year-old Mexican woman arrived at the UTMB
emergency room with tongue cancer. Her doctor applied for a teaching
waiver for surgery, but Dr. Richardson turned it down. Her reason was
that she couldn't approve a noncitizen for a teaching case. Dr.
Richardson says the woman was admitted to the hospital briefly but
discharged with a recommendation of places to seek treatment in
Mexico. "If somebody is sick, you want to treat them," Dr. Richardson
says. "When you find you can no longer uphold that credo, it's tough."