A Tale of ‘Rational Rationing’

How a ‘tough story to read’ in the Wall Street Journal inspired a $1 million gift to help UTMB’s indigent patients

By Judie Kinonen

Perhaps two million readers scanned their Wall Street Journals the morning of September 23, 2003. But for one, Peter Bentley, president of the Carl J. Herzog Foundation Inc., the newspaper held special interest: It carried a page-one “leader” story that moved his board to establish a $1 million endowment for UTMB’s uninsured patients.

Under the headline “A Stark Solution for Allocating Care,” Bentley read about UTMB’s system for rationing health care services—the Demand and Access Management Program (DAMP). Since 1998, this system has spared UTMB from running a yawning deficit in a time of soaring health care costs and shrinking reimbursements. The Journal story revealed how the program—which stipulates that people who are uninsured and can’t pay for treatment may be denied access to specific drugs and medical services—has shaken UTMB patients and doctors alike.

“It was a tough story to read,” Bentley says. Long concerned about problems with patient access to health care, the Herzog Foundation since 1993 has endowed scholarships for UTMB medical students from disadvantaged backgrounds, hoping that they will return to their hometowns and care for medically indigent people there. When Bentley and his board read the Journal story, they saw a good use for some of its funds. “It’s quite simple, really,” he says. “We saw an article, it touched us, and we decided to give [the million dollar gift] in hopes that others will contribute as well, to help a larger number of people.”

Bentley hopes additional contributors will boost the principal to at least $2 million, at which point all the interest may be used to pay for poor patients’ care. Until then, the Carl J. Herzog Foundation Endowment for Indigent Care stipulates that 10 percent of the interest from the $1 million endowment should be reinvested—leaving 90 percent of the $45,000 per year in interest available for indigent care.

“UTMB, unlike almost any other institution, decided to find a rational, systematic solution to the problem of unlimited demand for access to UTMB services at a time of limited resources.”

Reporter Bernard Wysocki Jr., who spent about ten days in Galveston researching the story, says it was the only article in the Journal’s seven-week series about the faltering national health care system to profile a single medical institution. The paper ran the series to underscore the rising numbers of uninsured and underinsured Americans and the strain they are putting on the nation’s safety-net hospitals. At most other U.S. medical centers, doctors and nurses have few guidelines to determine who gets which services. They make ad hoc decisions about treating uninsured patients without considering how their choices may affect patients who may be in more desperate need. UTMB is different, according to Wysocki.

“UTMB, unlike almost any other institution, decided to find a rational, systematic solution to the problem of unlimited demand for access to UTMB services at a time of limited resources,” Wysocki says. Before DAMP, UTMB faced an $80 million budget deficit, largely because 26 percent of UTMB patients were uninsured. Many did not pay their bills. Many others were covered only by low-paying Medicare, the federal program for the elderly, or Medicaid, the state-federal program for the poor and disabled. To keep UTMB solvent, President John D. Stobo appointed a committee of administrators, doctors and mid-level staffers to devise a set of restrictions on indigent care with rules that could be consistently applied.

DAMP mandates that all patients undergo financial screening before admission. Each must pay a fee before seeing a doctor. Except for children and patients needing emergency care, those without the initial $80 fee who cannot prove they are indigent may be turned away, as may patients with outstanding bills at UTMB. Some drugs are also restricted based on a patient’s ability to pay; exceptions are paid for from a pharmaceutical contingency fund of about $25,000 per month, now augmented by a portion of the interest generated by the Herzog Foundation endowment.

Such exceptions are made by high-level decision makers such as Dr. Joan Richardson, medical director for inpatient care, featured in Wysocki’s article wrestling with the agonizing choices she faces daily regarding UTMB’s indigent patients: whether a woman with breast cancer may get a $1,500 drug that may or may not help; whether a thirty-six-year-old man waiting for a heart transplant should get blood thinners his disability plan doesn’t cover; and whether a sixty-one-year-old uninsured Mexican woman with tongue cancer might be approved for surgery under a teaching waiver.

Thanks to the Herzog gift, in June 2004 Richardson was able to help a seventy-one-year-old man repeatedly admitted to the hospital with flash pulmonary edema—lungs filling with fluid—because of uncontrolled high blood pressure. He had the problem because he couldn’t pay for his $100-per-week’s worth of medications. Richardson says she was able to approve a waiver allowing the pharmacy to dispense enough drugs to keep the man in blood pressure pills for several weeks until he could be enrolled in a special manufacturer’s drug assistance program that supplies such drugs for free “if you can show that you are truly indigent.”

In another case in summer 2004, Richardson used Herzog funds to help a fifty-five-year-old woman who had suffered for two years from a chronic infection that failed to respond to conventional treatment. In the hospital, she got better thanks to a fairly new, expensive antibiotic that Medicaid covered only while she was an inpatient. Her doctor was ready to let her go home—with the stipulation that she take two more weeks supply of the antibiotic. She couldn’t afford the $300 for the medicine, however, so Richardson once again dipped into Herzog funds to pay for a pharmacy waiver.

“These were humane decisions,” Richardson notes of the two cases among many similar decisions she has made. “But the cold, hard truth is that they were also good business decisions.”

“These were humane decisions,” Richardson notes of the two cases among many similar decisions she has made. “But the cold, hard truth is that they were also good business decisions.” That’s because they kept patients reasonably healthy whom UTMB might otherwise have been required to keep hospitalized or to re-admit with life-threatening symptoms. Keeping an indigent patient in the hospital costs UTMB a minimum of $800 a day, Richardson points out—or $11,200 for the two weeks the woman fighting the infection would have required. Spending $300 instead to give the woman the two-week supply of antibiotics she needed to let her recuperate at home was a no-brainer—as long as Richardson had the Herzog funds to provide the drugs.

Richardson appreciates the vital role that philanthropy can play in helping cover the expenses of people who are medically indigent. And she hopes that the Herzog grant inspires similar gifts, both large and small. While she knows that private philanthropy cannot possibly fill the huge financial need created by an estimated 43 million Americans being medically uninsured, in individual cases such as those cited, it can give her the funds to provide life-sustaining care to some of those who otherwise might not have it.

The Wall Street Journal article motivated a gift that will ultimately help preserve the historic mission of an institution resolved to serve its community while staying financially viable. “Taking care of vulnerable populations is what we’ve been doing for 110 years, and we’re good at it,” as President Stobo explained to Wysocki. “Let’s have the intestinal fortitude to stay the course.”