Document 3J8L0QnOzvKjVE5aeb0JLkDKn
HEALTH / PAC
BUL ETIN BUL ETIN BUL ETIN BUL ETIN BUL ETIN BUL ETIN HealAtdh vPoilsicoy
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Center
1 Oklahoma Crude:
EVERYTHING'S GUSHING UP HOSPITALS.
Oklahoma City demonstrates that over - bed-
ding is a good thing - for everyone but pa-
tients and taxpayers.
10 CHIP Off the Old
Block:
BUT IS IT NATIONAL HEALTH INSUR-
ANCE? Nixon's bill may sound good, but the
fine print tells another story.
14 Vital Signs
16 Peer Review
No. 57 March / April 1974
Oklahoma Crude
EVERY
THING'S
uring the past two decades hospitals have
GUSHING UP sprung up throughout the United States like
HOSPITALS MacDonald hamburger stands. Now there are
too many hospital beds to fill with sick peo-
ple and the beds stand idle.
In Dade County, Florida about 7,500 beds
are needed but within two years the County
will have 12,000 beds. This is not an isolated
instance; the pattern is being repeated across
the country. St. Louis has 714 beds too many,
San Francisco 1,130 excess and Honolulu
1,000 empty beds.
Since over bedding -
is a national problem
(though a few cities like New York are ex-
ceptions) one has to conclude that either hos-
pital officials are monumentally inept plan-
ners or else that hospital construction serves
some purpose other than providing sufficient
beds for the infirm. Oklahoma City is a good
place to look for some answers because per-
haps in no other city are the politics of over-
"
bedding more transparent.
For a city of 700,000 people, Oklahoma City
has a lot of hospitals - 18 non federal -
hospi-
tals to be exact. Of these, however, only five
account for most of the patient admissions.
All except the University of Oklahoma - re-
lated University Hospital (UH) are private
voluntary hospitals: 195 bed - Presbyterian,
595 bed - Baptist Memorial Hospital, and two
Catholic institutions, 181 bed - Mercy and 800-
bed St. Anthony's Hospital.
Unlike many cities, Oklahoma City has no
municipal or county hospital. However, like
other cities, Oklahoma City has many medi-
cally indigent patients, perhaps more than
ten percent of the city's census. Up until re-
cently (see below), patients without hospital
insurance of any kind were admitted to UH,
a state facility related to the state medical
school. Indeed, UH served as the " dumping "
ground for the other hospitals in the city.
Unlike most other cities, UH served more or
less the role of a public hospital - it was the
hospital of last resort.
Preserving the Last Frontier
Oklahoma City suffers (or thrives) from an
untamed frontier mentality or ethos. Mr. E. K.
Gaylord, the town's one hun-d yreeard - -ol
d pa-
triarch and power broker, was one of the illus-
trious gentlemen who invaded Indian Terri-
tory prior to statehood in 1907. At age 100 he
is a bit more sedate but no less powerful. He
or his minions have membership on almost
every key public agency and private board
(more later about how those relate to hospi-
tals) and he and his son publish the state's
two leading statewide newspapers, The Daily
Oklahoman and the Sunday Oklahoman, as
well as Oklahoma City's evening Oklahoma
City Times. The empire also controls WKY
Radio Television -
. Thus the family molds pub-
lic opinion for at least one million readers and
listeners.
Hospitals are important for the image of
men like the Gaylords. They proclaim the
idea that the " West has been won " and are
a convenient display of the City's refinement.
The truth is, however, that building new hos-
pital pavilions is also good for business.
The hospital building boom started about
20 years ago, just about the time that Okla-
homa City hospitals changed their corporate
status from profit making -
, tax paying -
to non-
profit, tax exempt -
voluntary hospitals. Two
2 events convinced Oklahoma City business-
men, who then as now controlled the hospi-
tals, that it was better to switch than fight. In
1947 Congress passed the Hill Burton -
Law
designating many millions of dollars of fed-
eral money for hospital construction. The
money had to go, however, only to non profit -
hospitals. Then in 1954 the Internal Revenue
Service revised its regulations to grant spe-
cial tax exemptions to voluntary hospitals.
For Oklahoma County these rulings save the
hospitals some $ 20 million a year.
While it was said to have been the intent
of Congress and the Internal Revenue Service
that this money be used for care of the medi-
cally indigent, this isn't how it worked out
in Oklahoma City (or, for that matter, any-
where else). Instead the money has been
spent building unneeded, in fact, empty hos-
pital beds. A quick look at how hospital bed
need is calculated will prove the point.
Build We Must
There are four generally accepted formu-
lae for determining how many short - term
beds a community needs, and for projecting
bed needs into the future. The community
should not have a great deal more or less
than these formulae indicate. They are: (1)
the Hill Burton -
formula; (2) the Hill Burton -
adjusted formula; (3) the use rate /
formula,
a variation of which is utilized below, and
(4) the optimum occupancy formula.
A good way to determine about how many
short - term acute beds the community should
have is to use the locally accepted -
ratio of
four beds per thousand resident population
(4/1000), which assumes an 85 percent occu-
pancy rate. The primary patient origin area
of the Oklahoma County area hospitals is the
Oklahoma, Canadian, and Cleveland County
area. The population of this area is about
674,000 people. This produces a bed need of
2,696 short - term beds at 85 percent occu-
occupancy.
The expected increase in the population is
going to produce a three county -
population
of 700,000 people in 1975. This creates a need
for 2,800 short - term hospital beds.
However, the three county -
area will have
a projected 4,746 short - term beds in 1975
for a surplus of 1,946 beds. Each one of those
excess beds is costing about $ 50,000 apiece
to build and about $ 20,000 apiece to maintain
each year. The surplus will be at least 1,000
beds for 30 years, for a total cost to the com-
munity for unneeded facilities of over $ 650
million.
The local Oklahoma City hospitals that are
building the excess beds are borrowing the
money to do it, expecting to raise patient fees
for the next 30 years in order to recover the
cost of construction and of maintaining the
empty (producing non - income -
) beds. When
construction is completed the maintenance
costs are figured into the overhead costs of
the hospital and tacked onto the bills of the
patients occupying some of the beds. One
hospital which has completed its construction
and is already doing this is St. Anthony's
Hospital.
St. Anthony's Hospital
1968 to 1972 percent change
Average Daily Census up 1.6%
Number of Beds up 46%
Operating Expenses up 51%
Total Revenue up 62%
Net Income up 190%
In 1968 the hospital averaged 438 patients
a day. By 1972 while the number of beds had
increased 46 percent (259 beds) the number
of patients had increased only 1.6 percent
(seven) per day.
Some of the 51 percent increase in operat-
ing costs was passed on to patients in the
form of higher per patient day charges. The
hospital determines per patient day charges
by dividing the number of patient days for
the whole year into the cost of operating the
facility for a year. The increased cost is then
passed on to the government and to private
insurance plans and from there on to taxpay-
ers and subscribers. From this perspective it
is obvious that everyone, except the hospi-
totals responsible for the costs, pays through
the ear. Indeed, over construction -
of hospitals
and related facilities is the greatest single
factor causing national hospital cost inflation
(217 percent over the last ten years).
But inflation is only one of the costs which
result. In order to keep ahead of the game
and maintain their " surplus funds, " hospitals
must begin eliminating " unprofitable " serv-
ices. Some hospital services, such as medi-
cine and surgery, always make money and
are used to subsidize money - losing services
such as emergency rooms and outpatient de-
partments. To save money Oklahoma City
hospitals are cutting back on the number of
patients being seen in their emergency rooms
and outpatient departments and the number
of no pay - and part - pay patients. This has
been the major source of care for many of
the city's medically indigent, which the hos-
pitals obligated themselves to serve by ac-
quiring tax exemption. Patients are now
charged a pre admission -
deposit so that if a
family can't pay the deposit, the patient is
refused admittance or service. This allows
the hospital to divert the money from patient
care to paying construction and operating
costs of empty beds. For St. Anthony's Hos-
pital the data show:
St. Anthony's Hospital
Operating Data
1968 to 1972 percent change
Operating Expenses up 51%
Number of Beds up 46%
Average Daily Census up 1.6%
Occupancy Rate down 31%
Emergency Room Visits down 32%
Outpatient Visits down 54%
As the number of emergency room visits
and outpatient visits has decreased from 1968
to 1972 the same services at University Hos-
pital have until recently shown a dramatic
increase. As working people have been re-
fused at St. Anthony's Hospital, they have
gone to University Hospital in search of med-
ical care for their families.
In Oklahoma City over expansion -
is not
limited to St. Anthony's Hospital. Presbyte-
rian Hospital's capacity will increase from
195 to 412 beds when its new facility, now
under construction, opens. Mercy Hospital
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Ehrenreich, Long Island. 1974.
will go from 181 to 400 beds and Baptist Hos-
pital projects an expansion to 800 beds from
its present 595.
By 1975 the Oklahoma County area hospi-
tals will have an average occupancy rate of
55 percent because of the added bed days -
.
But this is not enough to pay the operating
costs and mortgages. A minimum of an addi-
tional 87,000 income producing -
patient days
will have to be found somewhere to help the
hospitals meet expenses. They are nowhere
to be found.
Choice, Not Chance
to heavy debt burdens incurred for unused
beds.
@ Increased costs of hospital care, passed
on to the patient.
OE Increased difficulty in maintaining med-
ical staff rules and regulations due to rela-
tive ease of shifting practices from one hos-
pital to another.
@ Increased pressure on hospital adminis-
tration to meet physician demands for du-
plicative expensive equipment, for fear of los-
ing the medical staff necessary for maintain-
ing the highest occupancy possible.
Miscalculations such as these just don't
happen by accident. The fact is that long
after it was known that Oklahoma City was
fast heading for an excess number of beds,
the most powerful business leaders kept re-
lentlessly pushing for further hospital expan-
sion. In 1969 the Community Council of Cen-
tral Oklahoma, whose members are the
Naturally, the Policy Board was not per-
suaded and further hospital expansion was
mandated. Since that time the boards of vari-
ous hospitals with representation on the Pol-
icy Board have proposed that an additional
695 short - term hospital beds be built by 1977.
This would simply waste another 34 $ million.
wealthiest and most influential business lead-
ers in the community, passed a resolution
changing the name of their own Health and
Hospital Planning Council to the Areawide
Health Planning Organization (AHPO) of
The Cost of Excess
Central Oklahoma. The Department of Health,
Education and Welfare then cooperated by
Hospital Beds
designating the organization the local Com-
OE By 1975, the population of the Oklahoma
prehensive Health Planning agency.
By 1970 the AHPO's staff was pitted in op-
City area, from which City hospitals draw
their patients, will be 700,000. (It is now 674, -
position to their own Policy Board over the
500.)
issue of hospital expansion. The Board, com-
OE With hospitals averaging 85 percent oc-
posed of hospital administrators and trustees,
cupancy, the recommended level, this size
doctors, government representatives and
population will require 2,800 hospital beds.
wealthy " consumers, " was pushing full steam -
OE Present building programs will be com-
ahead for more hospital construction. The
pleted, and the Oklahoma City area will have
staff, and anyone else who cared, knew that
4,746 such beds - a surplus of 1,946 beds!
no more beds were needed. Oklahoma City
OE At 85 percent occupancy this number of
was being inundated with hospital beds. An
beds would be sufficient to serve a popula-
independent consultant to the AHPO Board
tion of 1,186,000. (Official projections do not
confirmed the staff's judgment. The consult-
expect Oklahoma City to reach this popula-
ant reported that, " the... community will
tion until the year 2019.)
have 916 excess beds by 1975. " A subsequent
@ The cost of maintaining these 1,946
report concluded that there would be:
OE 35 to 50 million in capital expenses
wasted.
OE $ 20,000 per bed per year in operating ex-
penses with no off setting -
income.
empty beds will be $ 38,920,000 each year.
(An unoccupied bed costs $ 20,000 a year to
maintain - two - thirds as much as a full one.)
OE This averages out to a cost of $ 55.60
each year for every man, woman, and child
living in the Oklahoma City area.
OE Extreme pressure on hospitals to make
OE If this weren't bad enough, hospital ad-
" use " of the beds to increase income, result-
ministrators are currently planning to build
ing in unnecessary hospitalization.
another 554 beds by 1980!
OE A severe limitation in the hospitals'abil-
4
ity to explore new forms of health care due
-From an Oklahoma Consumer
Protection Agency Fact Sheet
Who Profits
" Profit " is a dirty word in the hospital in-
dustry. Yet profit is as important to profit non -
hospitals as it is to General Motors.
Some profits in hospitals are obvious - for
example, the $ 100,000 a year salaries gar-
nered by radiologists, anesthesiologists and
pathologists. Then there is, at least at the
larger medical centers, the $ 60,000 a year for
the administrators. And it isn't hard to see
where the staff doctors profit by being able to
use the hospital as their workshop without
having to pay anything back in return.
Chances are, however, that the hidden
" profit makers " will prove to be of greater
importance. Doctors may not profit from over-
expansion but other people sure do. Aside
from construction companies, which profit di-
rectly, lawyers, architects, surveyors, ap-
praisers, management consultants and money
lenders banks and insurance companies-
profit handsomely. After all, no hospital can
finance self -
major construction, so the hos-
pital must borrow money for expansion. The
money must, of course, be paid back over a
period of 20 to 30 years with interest, which
is where the money lenders make their profit.
In Oklahoma City this amounts to big
money. The tax exempt -
bonds issued by the
Oklahoma Industries Authority (OIA) to ex-
pand Baptist Memorial, Presbyterian and St.
Anthony's Hospitals total $ 89.4 million. The
OIA is a public - trust State agency establish-
ed by statute to ensure the economic and in-
dustrial growth of Oklahoma. After the OIA
funding of the three non profit -
hospitals, the
hospitals'anticipated 1973 to 1978 surplus
(profit) zoomed to a total of over $ 56 million
(this figure derives from the hospitals'own
bond feasibility reports).
OIA's chairman is Edward L. Gaylord, son
of the 100 year - - old Indian raider and Okla-
homa City's leading media baron. OIA does
business with Oklahoma City's First National
Bank and Trust Company, whose Chairman
of the Board sits as a trustee of OIA. The Bank
actually profits in at least three ways: on the
interest it receives on loans to the hospitals;
on investments it makes on the lump - sum
money OIA deposits for hospital construc-
tion in the first place; and on the expected
investment of the projected $ 56 million " sur-
plus " of OIA funded -
hospitals.
Bank executives are well represented on
the boards of all three hospitals as well as
other health policy making bodies (see box
page 6). The second leading Oklahoma City
bank doing hospital business is Liberty Na-
tional Bank and Trust Company. Liberty han-
dles part of St. Anthony's money and has its
Board Chairman on the OIA. In the last
analysis, after including only the money paid
on the principal and interest, Oklahoma City
health care consumers will have to foot an
astronomical $ 180 million for the hospital
over expansion -
now in the works. Of course,
the consumers'loss is the banks'gain.
Flies in the Ointment
Up until now the hospitals and banks have
had it all their way. They have been the re-
cipients of generous federal handouts and
have been able to depend upon free flowing -
reimbursement from Blue Cross which, as is
true elsewhere, is controlled by the hospitals.
There are, however, three things wrong
with this time honored -
, winning strategy: Fed-
5
6
You Scratch My Hospital, I'll Scratch Your Bank
Members of the Oklahoma Industries Authority
Position
Edward L. Gaylord
Chairman
Dean A. McGee
Vice Chairman
Ray A. Young
Secretary
Luther T. Dulaney
Member
Occupation
Executive Vice President -
and Treasurer, Oklahoma
Publishing Company
1. 1. Chairman of the
Board, Kerr McGee -
Corporation (Petroleum)
2. 2. Board of Directors.
Oklahoma Natural
Gas Company
Bank Affiliation
Board of Directors
Fidelity Bank
Hospital Affiliation
Philanthropist,
Presbyterian Hospital
(100,000 $ personal and
$ 100,000 from Oklahoma
Natural Gas)
1. 1. Honorary Chairman of the
Board, T, G, and Y
Stores
2. R. A. Young and Sons
(Contractors supplies)
1. 1. Chairman of the Board,
Dulaney's, Inc.
(Electrical appliances)
2. 2. Board of Directors,
Oklahoma Natural Gas
Board of Directors,
Liberty Bank
President and Member
of the Board, Baptist
Foundation
(Holds title to Baptist
Memorial Hospital.)
Lay Advisory Board,
St. Anthony's Hospital
Policy Bodies Affiliation
Vice President, Oklahoma
Health Science Foundation
1. 1. 1964 Citizen's Comprehen-
sive Health Survey
Committee
2. Chamber of Commerce's
Medical Education Task
Force
3. 3. Chairman, Oklahoma
Health Science Foundation
4. 4. Board of Directors,
Oklahoma Medical
Research Foundation
5. 5. Chairman, 1970 Executive
Committee Area Wide
Health Planning
Organization
1964 Citizen's Comprehen-
sive Health Survey
Committee
Board of Trustees,
Oklahoma Health Science
Foundation
J. W. McLean
Member
1. Chairman of the Board,
Liberty National Bank
2. Liberty National Corp.
3. Board of Directors,
Oklahoma Natural Gas
1. Same
2. (Holding
Company)
1. Lay Advisory Board,
St. Anthony's Hospital
2. Board of Trustees, Mercy
Hospital
Donald Kennedy
Member
1. Chairman of the Board,
Oklahoma Gas and
Electric Company
2. Board of Directors,
Missouri, Kansas and
Texas Railroad
3. Board of Directors,
Katy Industries
Board of Directors,
The Village Bank
1. 1964 Citizen's Comprehen-
sive Health Survey
Committee
2. Chamber of Commerce's
Medical Education Task
Force
3. Executive Committee,
Oklahoma Health Science
Foundation
Charles A Vose, Sr.
Member
Chairman of the Board,
First National Bank
and Trust Company
1. Same
2. Associate Director,
Founders Bank and
Trust Company '
3. Board of Directors,
Village Bank
4. Advisory Director,
Northwest Bank
1. 1964 Citizen's Comprehen-
sive Health Survey
Committee
2. Chamber of Commerce's
Medical Education Task
Force
3. Treasurer, Oklahoma
Health Science Foundation
George H. Shirk
Attorney and
General Manager
1. Attorney
2. Former Mayor of
Oklahoma City
Lay Advisory Board,
St. Anthony's Hospital
1. 1. 1969 Chairman, Health and
Hospital Planning
Committee of the
Community Council
2. 2. 1970 President of the
Community Council
3. 3. 1972 Community Survey
Services Committee
Harvey P. Everest
Former Member
Honorary Chairman of the
Board, Liberty Bank and
Trust Company
1. Same
2.
2. Advisory Director,
May Avenue
Bank and Trust
1. 1. 1964 Citizen's Comprehen-
sive Health Survey
Committee
2. 2. Secretary, Oklahoma
Health Science Foundation
3. 3. Vice Chairman -
, Oklahoma
Medical Research
Foundation
1. Oklahoma Industries Authority - A public trust agency established by statute to
ensure the economic and industrial growth of Oklahoma. It directly supplies loans to
hospitals.
2. Medical Education Task Force Created -
by the Chamber of Commerce to secure long-
term financing for major Oklahoma City hospitals.
3. Areawide Health Planning Organization - created by the Community Council of Cen-
tral Oklahoma (composed of wealthy businessmen) and successor to the Council's
Health and Hospital Planning Council. It is the local Comprehensive Health Planning
agency.
4. Oklahoma Health Science Foundation --- The health planning entity of the University
of Oklahoma Health Science Center. Its major goal is to secure long - term financing for
Health Science Center hospitals.
5. Oklahoma Medical Research Foundation -- Supplies part of the funds for the Oklahoma
Health Science Foundation. It is mostly concerned with long term -
capital financing for
major Oklahoma City hospitals, especially Health Science Center Hospitals.
7
eral money is becoming harder to get, and,
what's worse, the Nixon Administration is
savvy to the rip off - game hospitals have been
playing; nobody knows what to do about the
medically indigent - those without insurance
of any kind or the means to pay a hospital
bill; and enraged consumers are suing hos-
pitals to maintain the integrity of hospital
money supposedly to be used for the indi-
gent.
In theory the Oklahoma ad valorem tax
exemption law was supposed to take care of
the indigent problem. Hospitals were to use
the money saved by not paying taxes for the
health and hospital care of the poor. But that
is not the way it's worked out. Instead, hospi-
tals in Oklahoma City have done what hos-
pitals everywhere else have done demand -
that a prospective patient who doesn't have
insurance fork over a deposit ranging from
$ 150 to $ 500 before they will be admitted to
the hospital. In this way poor patients are
excluded.
On August 17, 1973 the Oklahoma Con-
sumer Protection Agency (whose members
pay property taxes) sued the Oklahoma
County tax assessor asking the Oklahoma
County District Court to order him to place
12 local hospitals on the ad valorem tax rolls.
The Oklahoma ad valorem tax exemption
law states: " such...
hospital facilities shall
be open to the public without discrimination
as to race, color or creed and regardless of
ability to pay.... " "
The plaintiffs charged in the complaint that
hospitals have violated the law by:
OE Requiring a pre admission -
deposit of
$ 150 to 300 $ [since raised to 500 $ by one hos-
pital] or coverage in that amount by a third-
party intermediary, or a combination of both.
OE Refusing to admit any individual who is
unable to pay a cash pre admission -
deposit,
or who does nothave sufficient third party -
in-
termediary coverage to meet the pre admis- -
sion deposit requirements, or who does not
possess a suitable occupation and income
upon which the hospital may determine the
applicant to be a good credit risk.
OE Discharging or transferring a patient for
whom third party -
intermediary coverage has
lapsed....
Hospital Expansion
Balance Sheet
When hospitals need to save money to pay
for shiny new unnecessary facilities, they dis-
tort the practice of medicine in two ways:
they cut back on services which lose money
-which are also the ones most heavily re-
lied upon by poor people - and charge illegal
pre admission -
deposits to exclude those who
cannot pay; and they overtreat and over-
hospitalize those who can pay (or who are
covered by some type of insurance), empha-
sizing acute hospital care to the exclusion of
outpatient clinics, preventive medicine, and
other services.
This graph illustrates how St. Anthony's
Hospital in Oklahoma City increased profit-
able operations and cut back severely on
money - losing ones.
-From an Oklahoma Consumer
Protection Agency Fact Sheet
1962
Profitable Services
1972
a |
1962
Unprofitable Services
1972
1962
om ri
1972 1972
1962
1972
1972
Surgery
up 22%
Radiology
up 63%
1962
[l
((
dy
Physical therapy
Emergency room
up 531%
down 46%
Outpatient Outpatient
down 50%
OE Refusing to discharge and threatening to
refuse to discharge patients until they have
made full payment of their accrued hospital
bill.
Until 1973 patients refused admittance
to Oklahoma City voluntary hospitals were
at least assured of getting into UH. As many
as 50 percent of UH patients were medically
indigent. This arrangement was agreeable to
the medical staff who needed the patients for
teaching purposes anyway and could admit
their own private patients to Presbyterian
Hospital a few blocks away.
But in 1973 the State took two actions which
threaten to end UH's role as hospital of last
resort for the poor. Early in the year the State
Legislature (controlled by rural based -
repre-
sentatives with no love for the urban hotshots
at the medical school) voted to divorce UH
from the State Board of Regents. This had the
effect of ending the state subsidy, leaving
UH to fend for itself just like any other volun-
tary hospital. To mitigate the criticism of wip-
ing out the only existing hospital for indigent
patients, the Legislature continued a small
subsidy for 1974.
Then in mid December -
, the State tightened.
the noose around UH even tighter. The Okla-
homa Constitution makes it illegal for a state
facility to run in the red, and UH had a $ 3
million deficit that was still growing. As a re-
sult, Governor David Hall (whose own admin-
istration is being investigated by a federal
grand jury) amended the state's contract with
UH to forbid UH doctors from admitting pri-
vate (read income producing -
) patients to any
private hospital. The effect was to force the
doctors to admit their own patients to UH and
this, on top of an earlier cutback on the num-
ber of beds, may force non paying -
patients
out of UH.
There are persistent rumors in Oklahoma
City that sooner or later UH will be forced
to close. The State Legislature periodically
talks of moving it to Tulsa. Meanwhile UH
daily becomes less distinguishable from
other voluntary hospitals.
Most impressively, UH is beginning to cut
its losses by doing what every other private
hospital is doing shafting -
the poor. For ex-
ample, emergency room visits fell from
about 20,000 for the first three quarters of
1972 to 16,500 for the same period in 1973.
More striking was the one third -
drop in out-
patient visits from the first quarter of 1973 to
the third quarter in the same year. It was in
this quarter that the economic cuts hit UH.
In March 1973 a page nine -
memorandum de-
tailing a scheme to charge pre admission -
de-
posits was leaked to the press by the Con-
sumer Protection Agency. Confronted by an
angry press and furious public, hospital offi-
cials lost no time denying any plan to exclude
folks who could not pay. But more recent
statements from the hospital cast doubt upon
this denial. Robert Snyder, MD, head of the
long range planning committee for UH's De-
partment of Medicine, says, " We must com-
pete with the private voluntary hospitals in
the City and cannot have Mickey Mouse
facilities for people who are paying their
way. " And another hospital spokesman
chimes in, " We are operating as a private
hospital with a modest State subsidy. In May
when the money runs out we don't expect to
admit non paying - patients. "
At the receiving end of all these punches
are the medically indigent who now have no
place to receive medical care. When a State
medical official was asked recently, " where
will the poor receive care? " he replied, " I
don't know. " Odds are he doesn't care either,
just so long as the State or the City doesn't
have to spend money for it.
In the meantime as the poor try not to get
sick for fear that they will not be admitted
to any hospital, OKC will have a 1,946 bed
surplus by 1975. Those with hospital insur-
ance will be paying higher premiums for
beds they cannot possibly use. In suburban
Northwest Oklahoma City a new hospital-
Edmund Memorial Hospital - has only 26 of its
100 beds occupied. It's a dandy situation-
hospital administrators polish their image
and enhance their stature by building bigger,
if not better hospitals; the local and state gov-
ernment saves money by denying care to
those who cannot pay; and the bankers rake
in the money. Only the people lose - but isn't
that the way it's supposed to be?
If you're doing any traveling, Oklahoma
City is the place to get sick. You will be sure
to find a hospital bed. But don't forget your
Blue Cross card. And watch your gall bladder.
-This article was written by Bob Nichols, who
is on the staff of the Health Protection Task
Force of the Oklahoma Consumer Protec-
tion Agency. He was assisted by Eric John-
son, an intern at UH Presbyterian -
Hospital,
and Deborah Roher, a student intern with
the Consumer Protection Agency.
INSURANCE
" ERAL
HOSPITAL
CHIP Off the
Old Block
BUT IS IT A vastly more liberal liberal
bill bill than the one
NATIONAL
HEALTH he introduced in 1971, " said the New York
INSURANCE? Times. " A serious, carefully designed na-
tional health insurance proposal, " said Sen-
ator Edward Kennedy. " An important spur
to growing congressional desire to pass a na-
tional health insurance bill, " said Business
Week. These are the assessments coming in
on President Nixon's Comprehensive Health
Insurance Program (CHIP), introduced in
Congress on February 6. Perhaps the most
10 important assessment of all came in the form
of sponsorship of the bill in the House by
Representative Wilbur Mills, Chairman of
the powerful Ways and Means Committee.
Why the stir? Because the bill contains
several promises that make it a serious con-
tender in the national health insurance
arena. Unlike Nixon's last proposal, it prom-
ises nearly comprehensive benefits, uni-
versal coverage and a single class of care
for all and -
all of this at no additional cost
to the taxpayer. So tantalizing are its prom-
ises that many politicians will find it irre-
sistible. But consumers had better take a
long, hard second look, lest the promises
turn to dust in their hands.
What the President Promises
Basically the President's proposal would
not guarantee anyone health care, but only
the ability to purchase a private health in-
surance policy covering a specific set of
services. This would be done under three
programs.
@ @ The Employee Health Insurance Plan
(EHIP) would require employers to pay 65
percent of the cost of health insurance pre-
miums for their employees; employees
would pay the balance. The Department of
Health, Education and Welfare (HEW) esti-
mates that insurance companies will charge
an average of $ 600 for an annual premium
covering a family of four, meaning that the
employer will pay $ 390 and the employee
$ 210 a year. (After three years, employer-
employee proportions would change to 75
percent and 25 percent, respectively.)
@ @ Under the Assisted Health Insurance
Plan (AHIP) state and federal governments
would subsidize, on a graduated basis ac-
cording to income, the purchase of pre-
miums for the poor, the unemployed and
those considered to be high medical risks.
OEOE OEOE Finally, Medicare would subsidize
coverage for the elderly, and its benefits
would be expanded to match those offered
by the other programs.
CHIP offers greatly expanded benefits com-
pared with the 1971 Nixon proposal. Also,
CHIP ostensibly offers the same benefits to
everyone, unlike the earlier proposal, which
would have given much less to the poor.
Benefits include (1) unlimited hospital and
physician services; (2) prescription and other
life saving -
drugs; (3) laboratory tests, X rays -,
medical devices and ambulance service; (4)
limited treatment for mental illness, alcohol-
ism and drug addiction; (5) certain nursing
home, convalescent and home health serv-
ices; and (6) services to children, including
preventive care, eye and ear examinations,
and dental care to the age of 13.
Persons covered by the President's plan
would be issued a " credit card " by their in-
surance company. The insurance carrier
would pay providers in full, presumably
making health services free at the point of
delivery for the consumer and eliminating
the basis on which many providers presently
discriminate against the poor. The carrier
would then be responsible for collecting
from the consumer whatever out pocket - of -
expenses he or she may owe.
What the President Didn't Tell You
These are the promises that President
Nixon hailed in his health message. What he
didn't hail is the fine print in this long, com-
plex bill, which undermines and occasion-
ally negates the promises.
@ @ CHIP is not national. Nixon's pro-
posal does not automatically guarantee
everyone health insurance. Instead, it is
completely voluntary; only if people join
and pay their share of premium costs will
they be covered. Hence it promises to leave
large numbers of people uncovered. First to
fall between the cracks will be the margin-
ally employed - and part time - workers. EHIP
does not require employers to offer health
insurance until employees have worked 90
days, and does not require coverage of part-
time workers at all. Such workers may seek
insurance through AHIP, but only by paying
much of the $ 600 premium themselves. This
will surely act as an incentive for employers
to hire part time -
workers and those who do
not require health insurance.
In addition, the cost of purchasing health
insurance will fall most heavily on lower-
income workers, who in a financial pinch
may decide to risk not being insured. At in-
comes above 7,000 $
a year, premium costs
are not graduated and the $ 7,000 - a - year
worker must pay the same 210 $ for a family
premium as a $ 70,000 - a - year executive.
Finally, many elderly may actually stand
to lose under Nixon's new program. Pres-
ently Medicare provides hospitalization au-
tomatically, and if elderly persons want cov-
erage for physician cost in addition, they
must pay a premium of $ 6.30 a month. Under
CHIP all health insurance coverage for the
elderly will be voluntary and will depend
upon paying premiums.
@ OE CHIP is not health insurance. It is
primarily catastrophic illness insurance.
CHIP incorporates a system of out pocket - of -
payments that will mean that the ordinary,
healthy family will seldom benefit from its
health insurance. In addition to the initial
$ 210 a year that a family must pay for its
premium, it must also pay the first $ 150 of
medical expenses per family member (called
a deductible), up to a total of $ 450 per year.
Thus it could end up spending $ 660 before
receiving any assistance whatever from its
health insurance. The same is true of CHIP's
drug benefits. Consumers benefit only after
paying the first $ 50 for drugs each year.
Once a family has spent $ 450, it's still not
home free. It must still pay 25 percent of the
succeeding costs (called coinsurance) up to
a maximum of $ 1,500. Only then does CHIP
take over and pay all costs. (Coinsurance
and deductibles are graduated according to
income for the poor - see accompanying
table.)
This system of deductibles and co insur- -
ance is called cost sharing -
by the govern-
ment. It is designed to discourage consumers
from misusing or overusing the health sys-
tem and to create an incentive for them to
seek out the least expensive care. This an-
alysis, of course, ignores the fact that a sick
person is not like a grocery shopper. A sick
person has little to say about when he needs
services, what kind, how many and which
facilities he uses. These depend on where he
lives, what kind of insurance he has, what
his doctor decides and where his doctor has
admitting privileges.
What Nixon's cost sharing -
would do is
turn CHIP into catastrophic health insurance
-used only when families have a devas-
tating illness that would otherwise result in
catastrophic debts. This aid is not insignif-
icant, since illness is the primary cause of
individual bankruptcy in this country. But
CHIP pretends to much more, including an
emphasis on preventive care. Yet a child
could only take advantage of CHIP's pre-
ventive care after having been sick enough
to have spent the first $ 150 in medical ex-
penses making -
a mockery of CHIP's pre-
tensions.
@ @ CHIP would come down hard on the
consumer who defaults on his out pocket - of -
costs. It would guarantee that he will get no
11
care whatsoever. Presently if a patient has
of providers and administration of cost con- -
outstanding bills, a particular hospital or
trol mechanisms. (With regard to the latter,
doctor may turn him away. But he can still
since the state pays little of the cost under
seek services from other providers. Under
CHIP only 25 percent of AHIP costs - its in-
CHIP all services would be paid for through
centive to control costs is questionable.) The
a medical " credit card " issued by a private
federal government must approve state
health insurance company and all out - of-
plans for doing these things, but short of
pocket expenses will be owed that company.
this, everything is left in the hands of the
CHIP would allow the company to cancel a
states. In fact, states apparently have the op-
" credit card " if debts are not paid within 90
tion of deciding whether or not they even
days, thus cutting off access to all partici-
wish to participate in CHIP.
pating medical services.
EHIP and AHIP would be administered ac-
@ OE CHIP would not be free at the point
cording to 50 different state plans (assuming
of delivery, nor would it guarantee one class
all states participate). Medicare would be
of care. These promises were undercut by a
run by the federal government, although
provision that would certify providers as
CHIP allows HEW to contract with insurance
fully participating, associate participating
companies for administration of the program.
or non participating -
. Associate participating
And as if all this isn't a big enough head-
providers (excluding institutions) would be
free to charge EHIP patients (earners wage -
)
ache, CHIP's system of graduated costs
would mean that both the states and the fed-
direct, individual fees above and beyond
eral government would be plagued with the
those paid for by their " credit card. " For
complexities of determining the exact income
EHIP patients, this would make a sham of
of applicants under AHIP and Medicare. The
services being free at the point of delivery
degree of complexity in CHIP belies Nixon's
or of their having a maximum liability for
aversion to big bureaucracy. CHIP's com-
medical expenses. For the poor and elderly,
plexity would necessitate an enormous bu-
it would mean discrimination as usual, since
reaucracy. The difference is that it wouldn't
they would clearly be less profitable to treat
be federal; instead it would be partly at the
than EHIP patients.
state level and partly within private insur-
OE @ Health - care financing under CHIP
ance companies.
would be enormously regressive, particu-
larly for the lower income -
worker. The esti-
Such complexity is inevitable if Nixon is
to satisfy all parties without making basic
mated $ 210 employee share of premium cost
changes in the health system. States would
would be the same for the 7,000 $ - a - year
be free to participate or not in CHIP. Health
worker and the $ 70,000 - a - year executive,
care providers could choose to participate
even though it comprises 3 percent of the
fully, partially or not at all, and in so doing
worker's salary and 0.3 percent of the execu-
would be free to accept the rate CHIP would
tive's salary. Likewise, the maximum out - of-
pay or charge more to their wage earning -
pocket expense of $ 1,500 would be 21 per-
patients. Insurors would be free, except for
cent of this worker's income - easily enough
small employers (under 50 employees), to
to throw a family into bankruptcy - while it
charge whatever negotiations will bear for
would be only 2 percent of the executive's
health insurance premiums. The only group
income. Only for the poor (families under
$ 7,000 and individuals under $ 5,000) would
whose freedom would be impinged upon is
employers, who must cough up 65 percent of
the cost be graduated.
employee health premiums. But with the
OE @ Finally, administration of CHIP would
demise of the Economic Stabilization Pro-
'
be unspeakably complex. Administration
gram, they are free to pass on the increased
would not be national, since the federal role
cost of employee health insurance to the
would be limited to establishing eligibility
consumer in the form of higher prices.
standards, defining the benefit package and
So it would seem that everyone is free to
administering Medicare (as the federal gov-
have his cake and eat it too everyone -
, that
ernment presently does). Left up to individ-
is, but the consumer. For the consumer, CHIP
ual states would be such crucial issues as
would not guarantee health care as a human
the regulation of insurance companies, re-
right but only private health insurance - and
view of rates received by insurance com-
only catastrophic health insurance at that
12 panies and medical providers, certification
-as a human right, and then only if the con-
sumer can afford it. And with CHIP's three
programs'sundry graduated cost scales,
Nixon has also decided who can afford to
pay how much. But if, after all that, the con-
sumer is still unhappy, of course he has the
ultimate freedom not to participate at all.
What National Health Insurance
Can't Deliver
But if the needs of the consumer are fore-
most, any form of national health insurance
is the wrong approach. Basically, national
health insurance speaks only to the issue of
financing. Yet more money is not necessarily
what stands between the average American
and good health care. America presently
spends more per capita on health care than
any other country in the world, yet on every
significant index, the health of Americans
rates below that of other industrialized coun-
tries.
This is because the $ 94 billion that Amer-
icans spent on health care last year goes
not primarily to protect and enhance their
own health, but to support the profits and
other priorities of a burgeoning health indus-
try. And more money will not necessarily
trickle down into better health care for the
consumer, any more than it ever has.
In fact, Americans have already had ex-
perience with this approach. For all the fan-
fare about the advent of national health in-
surance, America already has two such pro-
grams Medicaid for the poor and Medicare
for the elderly. Since their implementation
in 1966, the rate of medical inflation has
doubled. Doctors'fees have increased 130
percent and hospital rates have soared 217
percent. The average American now pays
$ 441 a year in health care costs. Medicare
and Medicaid have grown to over 80 percent
of the federal health budget and now repre-
sent over 50 percent of all hospital income.
Yet benefits to the poor and elderly have
hardly increased proportionately. Indeed,
the elderly pay more out pocket - of -
medical
expenses now than they did in 1966 when
Medicare was passed. Where did the money
go, if not to patient benefits?
The administration of Medicare and Med-
icaid was turned over to the health insur-
ance industry, especially to hospital - control-
led Blue Cross. And the money went pri-
marily to drive up doctors'and hospitals '
fees, as well as the profits of the health in-
surance, drug, hospital supply and equip-
ment and other health related -
industries.
With this massive influx of money, hos-
pitals in particular were able to build new
buildings, add fancy equipment and big-
name researchers, pay administrators at
rates up to $ 100,000 a year, hire labor con-
sultants to fight unions and public relations
firms to polish up their image afterwards,
and charge it all to patient cost. That cost,
in turn, was paid for with few questions
asked by the health insurance industry,
which has no vested interest in controlling
health - care costs.
Nixon's national health insurance plan, or
any other for that matter, will surely do the
same, so long as it does not change these
basic realities of the health industry. " If the
Administration's bill passes... two years
after implementation starts
..
*
health in-
(Continued on page 20)
SCALE OF GRADUATED OUT POCKET - OF -
COSTS
UNDER AHIP (FAMILY OF FOUR)
Annual
Income
Family Share
of Premium *
Per Person Deductible
Drugs Other
$
0-2,499
2,500-4,999
5,000-7,499
7,500-9,999
10,000 +
$ 0
0
300
600
900
$ 0
25
50
50
50
$ 0
50
100
150
150
* Based on cost of total premium estimated at 600 $.
Coinsurance
10%
15
20
25
25
Maximum
Liability
6% of income
9% of income
12% of income
15% of income
$ 1,500
13
THE HEALTH BILL RISES
Vital Signs
The Social Security Admin-
istration (SSA) has announced
=
MANPOWER AND MENTAL
HEALTH ARE OUT, CANCER
AND HEART DISEASE
ARE IN
President Nixon's fiscal 1975
budget request, sent to Con-
gress February 4, includes $ 4.8
billion for health programs,
a reduction of half a billion
from fiscal 1974 appropria-
tions. The programs most
heavily cut are education of
health professionals (the $ 365
million request is a $ 195 mil-
lion cut from fiscal '74 appro-
priations) and activities of the
Alcohol, Drug Abuse and
Mental Health Administration
(cut $ 98 million below fiscal
'74 funding). The National
Cancer Institute, on the other
hand, is slated for a $ 73 mil-
lion increase in appropria-
tions, and the National Heart
and Lung Institute gets a 22.8 $
million increase. (Other re-
search fares badly, however;
a $ 44.2 million reduction in Re-
search Resources is slated,
mostly accounted for by dis-
continuation of the General
Research Support Grant pro-
gram.)
The health budget request
also reflects the Administra-
tion's second effort (see BUL-
LETIN, May, 1973) to termi-
nate the Hill Burton -
hospital
construction program and the
Regional Medical Program;
these plus Comprehensive
Health Planning, Area Health
Education Activities and Ex-
perimental Health Services
Delivery Systems would be
subsumed under a new Health
that total spending for health
care in the United States was
$ 94.1 billion in fiscal 1973, an
11 percent increase over
spending for fiscal 1972. Per
capita health expenditures
.
rose from $ 400 to 441 $. SSA's
breakdown of fiscal '73 health-
care expenditures went as fol-
lows:
Hospital care
Physicians '
services
$ 36.2 billion
18.0 billion
Dentists'services
5.4 billion
Other professional
services
1.7 billion
Drugs and sundries
Eyeglasses and
appliances
Nursing home care
Expenses for
prepayment and
administration
Government
8.8 billion
2.1 billion
3.7 billion
4.2 billion
public health
activities
2.8 billion
Other health
services
4.6 billion
Research and
medical facility
construction
6.5 billion
That figure of 4.2 $ billion
for prepayment and adminis-
tration costs includes $ 3.3 bil-
lion in private insurance com-
pany retentions, an increase
of over $ 1 billion from the pre-
vious fiscal year.
PRE CERTIFICATION -
BITES THE DUST
HEW Secretary Caspar
Weinberger announced Febru-
ary 8 that HEW was abandon-
ing proposed regulations un-
der the 1972 Medicare and
Resources Planning Act, to be
Medicaid amendments that
submitted to Congress shortly,
would have required prior ap-
for which $ 75 million is re-
proval by a utilization review
14
quested.
committee of non emergency -
admissions of Medicare and
Medicaid patients to hospitals
and skilled nursing facilities.
Touted originally as a means
of controlling the rising costs
of those programs, the pre - ad-
mission certification proposal
was withdrawn after the AMA
and AHA had threatened to
sue and the AMA had sent a
top level - delegation to the
oval office to meet with the
President on the issue. AMA
Board Chairman Dr. James H.
Sammons had said at a news
conference announcing the
Association's readiness to
fight the regulation in court:
" The Secretary should know
better. He's got some real
smart doctors working for him,
but apparently he doesn't
listen to a word they tell him. "
Perhaps with some presiden-
tial assistance, the Secretary
is now a better patient.
PRIVATE IS BETTER,
OR IS IT?
On February 14 the Presi-
dent dedicated a $ million 75 -
addition to Cedars of Lebanon
Hospital in Miami with the
ringing statement, " When I
go to a hospital, or when I
have to call a doctor, I want
that doctor to be working for
the patient and not for the fed-
eral government. " The Presi-
dent failed to mention that
only the previous day he had
received his annual checkup
at Bethesda Naval Hospital
under the aegis of a team of
doctors working for the Navy,
which the last we heard was
part of the federal govern-
ment, and whose performance
was apparently up to presi-
dential standards.
The new hospital facility
example of the United States '
" great private health care sys-
tem, " which is, of course, " the
best in the world. " Again the
President did a little editing of
the facts: The facility in ques-
tion was made possible by a
$ million 62 - loan guaranteed
by the Federal Housing Ad-
ministration, otherwise known
as a government agency. On
the other hand, had the facil-
ity been built with a federal
grant, its patients would not
be saddled with an estimated
$ 20 per patient per day in
debt service on the loan. And
if local health planning offi-
cials had had their way, the
500 bed - addition would never
have been built; these offi-
cials estimate that by 1975,
the Miami area will have a
surplus of 4,000 acute - care
hospital beds. That prospect
does not augur well for con-
trolling the inflation of hospi-
tal care -
costs, something about
which the President has often
expressed his concern.
nancially hard pressed - institu-
tion from every member of the
medical staff as a prerequisite
to reappointment. The action
has led to cries of " blackmail "
from some physicians and a
threat to file a complaint with
the State Attorney General's
office. An AHA spokesman
called the requirement " not
the way to run a railroad, "
and an AMA official called it
" a violation of the principles
of medical ethics of the AMA. "
The president of the medical
staff, Dr. Solomon Ciprut, on
the other hand, called it a way
to avoid shutting down such
hospital services as pediatrics,
obstetrics and gynecology
and rehabilitation medicine, a
move that had been proposed
by the hospital.
THE VMA IN THE
FOOTSTEPS OF THE AMA
The Montgomery County,
Maryland County Council is
considering a bill that would
create a tax supported -
clinic
where low income - persons
could receive services
free or for a fee based on
their ability to pay - the serv-
ices in question being sterili-
zation of their cats and dogs.
The County Veterinary Med-
ical Association has attacked
the bill as " an infringement of
our rights to free enterprise,
an unfair competition by the
government. " Sound familiar?
TELEPHONE TIME IS
MONEY, TOO
LET ME MAKE MYSELF
PERFECTLY CLEAR
DO DOCTORS NEED
HOSPITALS $ 500 WORTH?
The medical staff organiza-
tion at Maimonides Medical
Center, 650 bed - vol-
untary hospital in Brooklyn,
New York, has voted to require
a $ 500 contribution to the fi-
Telephone consultations
may be going the way of the
house call. A time study -
ex-
pert, R. Alexander Mackenzie,
advises doctors that a $ 50,000-
a year -
physician who wastes
an hour a day on the tele-
phone is lowering his income
by $ 6,250 a year.
15
A
Peer Review
BOSTON DISSENT
Dear Health / PAC:
This is a letter pertaining to
the article " As the Nation
schools very ofen competed or
worked together as it suited
them.
When the " big " change-
over to Boston University Med-
ical School happened, the
only important issues were the
budget cuts by the city gov-
ernment and the loss of bed
Goes So Goes Boston, " which
appeared in the October 1973
BULLETIN. We decided to
space and services as a result
of Harvard and Tufts pulling
out. It is a real mixture of ar-
write this letter to try to clar-
ify some of the inaccuracies of
the article about Boston City
Hospital as well as to question
the very premise around
which this BULLETIN was
written.
We were members of the
Better Breaks Group and were
deeply involved in political
work at Boston City Hospital
(BCH) for three years prior to
these latest struggles concern-
ing the budget cuts and the
dismissal of the black admin-
istrator Steven Washington.
As people very involved in
work at BCH, we disagree
with the premise that BCH is a
public hospital going private.
Previously, BCH had been
shared by three medical
schools Harvard -
, Tufts, and
Boston University. The admin-
istrator of the hospital was al-
ways part of the Health and
Hospitals Department of the
City of Boston. The Mayor of
Boston appoints commission-
ers and directors of BCH. The
medical schools worked to-
gether with the city bureau-
crats to run the hospital and
for years had used the pa-
tients of BCH for any research
or study they wanted. In fact,
Harvard invested millions of
rogance and presumption to
state, " The Boston City activ-
ists might also have better ad-
dressed themselves to what in
the long run will be an even
more serious development at
Boston City Hospital - its take-
over by Boston University-
rather than get caught up in
the urgency of the budget
crisis. " [See editorial, October,
1973 BULLETIN.]
This may be the correct an-
alysis for the situation in New
York City but contrary to the
opinion of the Health / PAC edi-
tors, New York City is not the
center of the nation - it is not
the nation. Progressive people
in the United States have long
been plagued with this New
York City chauvinism since
the days of Columbia. No
thanks!
The changes at BCH have
been the loss of many jobs,
the curtailment of many serv-
ices, and the closing of floors.
The Board of Trustees, a pow-
erless supposed voice of the
community, still exists. The
City patronage system is still
intact. The only difference is
there are two less medical
schools training doctors and
experimenting on the patients
of BCH.
dollars of city and federal
funds in developing the fa-
mous Mallory Institute of Pa-
thology, the Channing Infec-
tious Disease Research Build-
We would like to tell the
real story of what happened at
BCH. We feel this should be
published by Health / PAC be-
cause it contains lessons for
ing, and the Thorndike Re-
all people involved in hospital
16
search Building. The medical
organizing, and we also feel
that this is the type of discus-
sion that should be going on
in the BULLETIN. The chain of
events at BCH can best be
told by talking about the Bet-
ter Breaks Group and its rela-
tion to the struggle. We feel
that the meat of the article on
BCH was inadequate and in-
accurate and we would like to
clarify and expand on many
of its points.
The Better Breaks Group
(BBG) was ".... composed pri-
marily of young white tran-
sient educated employees in
their first year at the hospital. "
This is a good description of
the leadership of BBG, but not
a description of the people who
came in and out of the group.
There were many instances
when interested Black hospital
employees as well as Black
and Spanish speaking - people
from the community worked
with BBG. There were also old
and young white working-
class people, nurses, medical
students and many other hos-
pital workers.
The great interest in BBG
arose when this group became
involved in the support of a
Black administrator, Steven
Washington. Steve Washing-
ton, the night administrator on
the busy emergency floor,
took a personal stand against
the brutality of the Boston Po-
lice to BCH patients. For his
brave efforts he was arrested
on a trumped - up rape charge
and subsequently fired.
Two grave errors were
made by the leadership of
BBG in the Steve Washington
struggle. For one, Steve and
his wife Karen and other Black
people interested in Steve's
case were never actively in-
corporated into the BBG. Much
of the initiative and leadership
exhibited by both Karen and
Steve was systematically un-
dermined by the people who
ran BBG.
Many groups on the Left
talk about Third World leader-
ship being essential in any
movement for true social and
political change within this
country. The struggle for Steve
Washington was a perfect op-
portunity for that leadership
to have developed. Who is
more qualified to lead a strug-
gle the - people directly in-
volved in that struggle, or as
the BBG leadership believed,
outside semi professional - or-
ganizers themselves -.
' This became the main con-
cern of ours and the main con-
cern of other people working
within BBG. We were dealing
with a leadership that: (1) was
not committed to practice of
the idea of Third World lead-
ership; (2) acted as if Third
World people were incapable
of acting either politically or
effectively; (3) did not respect
the idea or the fact that the
Black community is a sepa-
rate entity with its own right
to self definition -
and _ self - de-
termination.
Points 2 and 3 were best evi-
denced by the fact that lead-
ers of BBG, without consulting
anyone Black or white in the
group, felt they could go
ahead and offer proposals on
community control of police to
the Massachusetts Black Con-
gressional Caucus. These
proposals came out of a meet-
ing that Steve Washington
spoke at. The letter that was
written implied that it was
speaking for employees at
BCH and was made to seem
as if it originated from Third
World people residing in the
area.
The second major error was
believing that white counter-
culture community and media
could bring about change at
BCH. The roots of the leader-
ship of BBG were the Cam-
bridge based war anti - student
movement. To publicize Steve
Washington's case, an inter-
view and program was done
by the radical newscaster of
the counter - culture radio sta-
tion. This program consisted
of a taped interview with
Steve which was inter spliced -
with statements from a white
radical nurse who worked on
the accident floor, quotes from
Stokely Carmichael, and soul
music. The tape made Steve
seem like a Black revolution-
ary hero, when in fact if you
knew the man and listened
only to what he said on tape,
you would realize that Steve
was a very sensitive person
who possessed a strong sense
of justice for all people. (Steve
had defended a white youth
at the hospital from being shot
by the police.) This misrepre-
sentation of Steve as a Black
militant was the hip media
image of Black people. This is
the image that makes good
press and is the classical ra-
cism of dealing with stereo-
types and not real people.
In statements made by the
nurse, she said that all secur-
ity guards at BCH were white.
This was erroneous. Almost
one half - of the guards at BCH
are Third World people. She
also stated that all white work-
ing class -
people at BCH were
racists. This helped to polarize
and turn - off people who in fact
weren't racists. One of these
people had worked the previ-
ous year in a political group
at BCH with a Puerto Rican
chairwoman and even though
this person was a racist to
some degree, she was still
able to function in a group
that talked about community
control of the hospital and had
Third World leadership. She
was insulted by the tape and
did not participate in this im-
portant struggle because of it. 17
After Steve's struggle was
underway but being stalled in
meeting after meeting of the
Board of Trustees of the hos-
pital, the issue of the budget
cuts mentioned in the BULLE-
TIN article began to arise.
At this point many people
in BBG became sick of meet-
ings in which the major topic
of discussion was when to
hold the next meeting. There
was never an official chair-
person, just some lucky per-
son given the privilege by the
leadership. Minutes were in-
frequently kept and conven-
iently lost. (One is reminded
of that wonderful paper by Jo
Freeman on the " Tyranny of
Structurelessness. ") Just when
people within BBG would at-
tempt to define the group and
the group's objectives, the
leadership would feel it was
being challenged. It would ob-
struct meetings, not stick to the
agenda decided upon at pre-
vious meetings, and play per-
sonality and power politics
with the Progressive Labor
Party and other factions with-
in the organization.
Many people in the group
were pushing for some direc-
tion and structure. Many peo-
ple wanted BBG to take a po-
sition on the budget cuts. Peo-
ple from the Progressive Labor
Party (PLP) had a big role in
BBG and, along with other
people, started the Ad Hoc
Committee Against the Budget
Cuts a spin - off group of BBG.
PLP and the National Caucus
of Labor Committees eroded
the budget struggle by telling
hospital workers why they
should support the Ad Hoc
Committee. Since workers at
BCH know what PLP is about,
many people were turned - off
to this struggle. People in BBG
could have taken a strong
stand on the budget cuts and
18 neutralized the effects of PLP
and the National Caucus of
Labor Committees. Instead,
the leadership of BBG clung to
their own sectarian non posi- -
tion and accelerated the de-
mise of any resistance to the
budget cuts at BCH.
Meanwhile Steve Washing-
ton and friends got it together
and built his own defense re-
lying heavily on the Black
community and having to go
outside BBG and the hospital
completely. He finally won his
struggle both in the courts and
at BCH.
The opportunity for the
Steve Washington struggle to
build a bridge between the
community and BCH hospital
workers was lost. Had Steve
and Karen become leaders or
even full members of BBG in-
stead of being manipulated by
the leadership: (1) many Black
hospital workers would have
joined BBG; (2) BBG would
have developed a direction
and purpose so unreachable
for white middle - class rad-
icals; (3) because of their
strong connection and involve-
ment with an ongoing group
of hospital workers, Karen and
Steve may have worked on
other hospital issues such as
the budget cuts.
If we are to have progres-
sive struggles in this country,
we must understand that it is
a necessity for oppressed
Third World people and op-
pressed white people to work
and struggle together to over-
come the racism of three hun-
dred years that separates
them and to struggle together
for social political change in
this country. The Better Breaks
Group was not only a failure
but was a retarding force in
that struggle.
The subtle middle - class
counter - culture racism of these
" political " organizers was in
many ways more vicious and
divisive than the fearful emo-
tional, often violent, racism of
some white working - class peo-
ple. The racism of working-
class whites is based on ig-
norance and false privilege
while the racism of the white
radical is based on real pri-
vilege and elitism. Therefore,
it is more productive to settle
the differences between Third
World people and working-
class whites because the reso-
lution of these differences is
the foundation upon which so-
cial movements as well as
revolutions are built.
-Marshall Blesofsky
and Susan Sklar
The authors reply:
We could not respond to
every point in the Blesofsky /
Sklar letter without writing an-
other whole article, but at the
outset we wish to say that we
disagree with many of the
" facts " and most of their an-
alysis. Certain crucial points
bear comment:
1. First and foremost, why
all this talk about Steve
Washington when we wrote,
as individuals, an article
about the budget struggle?
This letter mainly criticizes
work that we didn't write
about and the reader cannot
legitimately judge the merits
of the criticism.
2. We don't believe that ra-
cism is best fought by a pas-
sive attitude of whites toward
Blacks. As far as the whole
Steve Washington case, the
BBG never took any action
without consulting the Wash-
ingtons; but making Steve and
Karen the leaders of BBG
would not have solved either
their problems or the organi-
zation's. Blesofsky and Sklar
criticize others for making
Steve Washington a Black
hero, then turn around and
say that his and Karen's lead-
ership would have solved a
whole array of political prob-
lems. This is certainly no more
sensitive a view than what
they criticize, and downright
naive about how to build a
mass organization of hospital
workers.
3. Still, we freely acknowl-
edge the organization's limita-
tions, on both the Steve Wash-
ington and budget issues. But
we believe that anyone, no
less " white radicals " such as
we and Blesofsky and Sklar
are, has the right and respon-
sibility to build a much need- -
ed people's movement at BCH.
Many of our weaknesses stem-
med from the distance be-
tween us and our co workers -
,
and their distrust of fly by- -
night radical organizations
such as besieged the hospital
during the budget cuts. Rad-
icals will only be able to see
beyond our noses to the real
needs of the people when we
are willing to drop the rhet-
oric and style of the sectarian
left, such as Blesofsky and
Sklar use. To do this we don't
have to deny who we are, but
we can't keep trying to apply
simplistically the old formulas
such as, " World Third -
leader-
ship " or " subtle middle - class
counter - culture racism. " The
BBG attempted to make the
transition to a mass organ-
ization; hopefully others can
learn from our mistakes as
well as our successes.
4. It is wall off - the -
for Bles-
ofsky / Sklar to try to throw in
guilt by association. We aren't
the media; we didn't control
what went into coverage by
the Boston Globe, both Boston
anti establishment - weeklies,
the Bay State Banner (a local
Black weekly), or Challenge,
or any of the other coverage,
including the radio station
they refer to. But we're proud
of having gotten the media in-
terested, because their cover-
age helped keep the pressure
on, and so helped win Steve's
case and make it a lesson for
many people.
5. We are open to criticism
-our article was itself a crit-
icism of much that we did
last year. Through construc-
tive criticism of our practice
we hope to learn better and
more effective ways of build-
ing organizations. If the an-
swers were as obvious as
Blesofsky / Sklar imagine, the
movement would have been
built long ago.
-Jeff Blum, Jerry Feuer, Joan
Tighe, Kate Mulhern
KAISER: THE TRUTH,
THE WHOLE TRUTH?
Dear Health / PAC:
Your issue " The Kaiser Plan "
(November, 1973) is a consid-
erable improvement over
earlier Health / PAC efforts
dealing with the Kaiser form
of prepaid group practice, but
still has serious distortions
and misstatements of fact. This
disturbs me very much, be-
cause I see a real need for a
group such as yours. But our
mutual cause is hurt by slop-
py reporting. There are many
of us who deal with these is-
sues on a day - to - day basis
who would be delighted to
have a chance to have input.
To the point: there is much
that is right in the issue, and
the reporters have presented
certain facts not readily avail-
able. On the other hand, there
are both general and specific
flaws. Generally, despite the
citing of references, the article
is full of value judgments
which are not backed up by
evidence, and some of these
are just wrong. Furthermore,
as Dr. Steve Jonas has written
recently, the anti capitalism- -
in health -
position has no val-
idity unless related to a gener-
al position, and your Kaiser is-
sue certainly has this flaw.
Further, the description clear-
ly deals only with the North-
ern California Permanente
Medical Group, but the find-
ings are generalized to all of
Kaiser, when such groups as
Hawaii and Portland are quite
different. And finally, the em-
phasis leaves the impression
that Kaiser is a bad plan,
when the judgment at the be-
ginning, " Kaiser's not good,
but it's the best around " is
much closer to the truth. An
anti Kaiser - position has no
validity unless related to the
fragmented, discontinuous, ma-
nipulative and patronizing
way in which medical care is
usually delivered.
Specifically, I particularly
object to the statement that
the doctors are salaried, made
at the beginning of the article.
Later, this is explained more
fully, but then is summarized
as " physicians are salaried. "
Perhaps the staff members of
Health / PAC have never been
subject to an unreasonable
boss, and responsible to him
for a salary. I have, and I feel
strongly that the medical
group structure is completely
different, in theory, if not in
Northern California. The phy-
sicians have a prospective
budget, which they draw up,
and they pay themselves de-
pending on that budget. Thus,
the medical group, ideally at
least, and truly in some set-
tings, is a kind of participa-
tory democracy. As in all of
the medical system, non phy- -
sicians are excluded from par-
ticipating, which seems
wrong.
Secondly, I would like to
know the evidence for the
statement on page 8, " Clearly,
it is more economical for
Kaiser to have a continuous 19
stream of new _ subscribers
who don't know how the sys-
tem works. " It is not clear to
me. It would be interesting to
compare physician and hos-
pital utilization of new en-
rollees to that of enrollees
with more tenure. I don't know
the result, but I wouldn't be
surprised if the finding was
the opposite of that so confi-
dently predicted. Kaiser, if
anything, is efficient and plan-
ned, and unpredictable utiliza-
tion is not what such a plan
thrives on.
One more blatant wrong:
on page 8 also, the words of a
Kaiser economist are twisted
to support the statement,"
..
Kaiser is no different than pri-
vate insurance companies in
skimming lower risk people
from the population. " No real
evidence is cited to back up
such a statement. Demograph-
ic characteristics of a popula-
tion do not fully explain its
utilization. In fact, there is evi-
dence to suggest that those
who choose Kaiser are sicker
than others, or more worried
about their health. In the study
cited in the article to support
other biases of Carnoy et al.,
Health Insurance Effects by
Roemer, but not used on this
point, it is concluded: " All in
all, the evidence suggests that
the commercial plans... man-
age to attract enrollees with
the lowest overall risk of ill-
ness, the group practice plans
get the highest risk enrollees,
and the provider plans fall in
between. " I find this the worst
part of the article, when a
statement made is at least
partially refuted by facts in a
study cited.
I write in this rather harsh
tone because I would like to
expect more of Health / PAC. I
find the medical care litera-
ture to be well cited -, with
20 carefully hedged statements,
etc., but mostly not the truth.
I am convinced that Health /
PAC attempts to tell the truth,
but articles are too often flaw-
ed by sloppy reportage and
insufficient regard for facts.
If the two methodologies could
be put together, it would be
powerful.
-David Banta, M.D.
Assistant Professor
Department of Community
Medicine
Mount Sinai School of
Medicine
Health / PAC replies:
In answer to some of Dr.
Banta's points, first it is true
that most of the information
was derived from Northern
and Southern California. We
consider this justified, how-
ever, since over 85 percent of
Kaiser's subscribers live in
these two regions.
Secondly, Dr. Banta
can
quibble about how K - P phy-
sicians are paid. He may find
to his surprise, however, that
most Kaiser physicians con-
tend that they are salaried,
and they like working at
Kaiser for that very reason.
In theory Kaiser claims to
have some form of physician
" participatory democracy. " Dr.
Banta should reread our ob-
servations on page 15. We
found many physicians in
Northern California to be dis-
gruntled with the K P - hier-
archy. In fact, many in the
past have resigned over this
very issue.
To our knowledge there are
no statistics available proving
that new subscribers utilize
Kaiser more than older sub-
scribers as Dr. Banta con-
tends. Our information, which
would indicate the opposite,
comes from extensive inter-
viewing of Kaiser personnel
and is summarized in the
statement of one hospital ad-
ministrator who said he be-
lieves that new _ subscribers
use the system far less be-
cause " it overwhelms them at
first. " He continued, " We have
a difficult time getting new
enrollees to come in for their
first yearly checkup. "
If Dr. Banta had read the ar-
ticle more carefully, he would
have noted our evidence that
demonstrates that Kaiser
skims off lower - risk people.
On page 8 we say, " Only 4.2
percent of Kaiser subscribers
in Northern California are
over 65, whereas 9 percent of
the general population are in
this high risk age. " Further-
more, Dr. Banta knows Kaiser
enrolls primarily working peo-
ple whose employers or
unions pay part or most of the
monthly payment. The poor
and unemployed, who are
known to have more health
problems, usually do not have
the option of joining Kaiser.
CHIP
(Continued from page 13)
surors could collect double
their present annual premium
income, " writes Business Week
(January 26, 1974). And with
Nixon's CHIP, as with Med-
icare and Medicaid in the past,
there is no assurance that
care will be more accessible,
of higher quality, more ac-
countable or more geared to
patient needs. There is only
the assurance that, be it
through taxes, insurance pre-
miums or direct payments, the
health - care consumer will con-
tinue to finance spiralling
health - care costs and the
health of everyone else in the
system except himself.
-Ronda Kotelchuck
