Philadelphia Reflections

Bethlehem, Pennsylvania 18018

Internal Medicine

Hematology

Phone 691-2282

December 2, 1989

George Ross Fisher, III, M.D.

829 Spruce St. Suite 308

Philadelphia, PA 19107

Dear George:

I served as a chief teller at the recent House of Delegates meeting. This experience has convinced me that we must change our method of voting. We can no longer efficiently manage the business of the house using paper ballots. The mechanism is too slow and inefficient.

I also favor the abolition of the bullet ballot. As you pointed out on the house floor the bullet ballot controversy is closely linked to the concept of plurality votes. Plurality voting is the official practice of the Pennsylvania Medical Society and it is debatable as to whether this is something that should be preserved.

If we intend to abolish the bullet ballot and plurality voting it is going to be mandatory that we have some type of electronic or mechanical mechanism for counting ballots.

I have mentioned this to Jack Rhodes and Howard Richter. The problem is that no one knows how to do this type of voting but I am certain that with some degree of ingenuity a mechanism could be found. Surely this problem must face other organizations and perhaps we can get some advice and guidance from our friends at the AMA.

I hope that you will give this problem some consideration since I suspect it will be discussed at the board of trustee’s level sometime during the next year.

Best wishes,

James R. Regan, M.D.

JRR/gms

Letter pertaining to The Hospital That Ate Chicago. from Michael Smith, M.D.

Michael Smith, M.D.

P.O. Drawer 1037

Thibodaux, LA 70301

October 2, 1981

Dear Mike:

I have just finished reading The Hospital That Ate Chicago. Thank You for recommending it. I have some observations to offer:

First, you may be interested to hear the description of trying to control hospital costs by the President of the American Association of Foundations of Medical Care. He said it was like a balloon that when squeezed at the bottom made the top larger. He believes hospitals are the most serious problem facing medicine.

Second, some years ago I presented the AAP Committee on Third Party Plans with an estimate of the potential cost of paying first-dollar coverage of small fees. Making some assumption, it goes like this:

Cost of Visit $25.00

Cost of Filling out health insurance form $ 3.00

Cost of Insurance Company to process claim and Send Check $ 5.00

Cost of Health Insurance Collection and General Administration $ 2.00

Total Administrative Costs $10 for a $25 Charge = 10/25 = 40%.

Obviously this would be nonsense. Possible ways out would be:

1. Computers in office and in the insurance company which might reduce the costs to $2.00 for each and reduce general administrative costs to under 20%.

2. Packaging small fee charges into a single “Limited pre-payment package of service.” We have done this in our office and have been able to reduce overhead. However, insurance doesn’t recognize the package and we ended up making out health insurance forms for each visit. On the other hand, our preprinted forms allow us to do this for a minimal cost. I believe that with or without CHIP or an IPA-HMO that this concept is worth consideration.

3. The Lifeguard IPA manages to survive and prosper in spite of complete prepayment with the exception of a $3.00 cash outpatient insurance charge and a $10.00 cash emergency room charge.

Third, I worked for two years in a complete prepayment scheme for a coal miners local union. I don’t want to do that again!

Fourth, if we believe that indigents would not be able to self-insure, as Fisher seems to believe, then where do you draw the line? Large numbers of people are borderline and the young parent is more often than not in that group. For many, a $100 deductible is a catastrophe.

Fifth, as an employer I self-insure to a $500 deductible for my employees. I hear you.

The basic problem I see with CHIP or Fisher’s self-insurance is that it leads to 100 percent coverage of expensive surgical and hospital charges and invokes the moral hazard where the damage can be the greatest. Fisher’s contention that there is relatively little un-needed hospitalization ignores a lot of experience. It probably reflects the way he grew up learning about medical care. We all learned to practice in an era where almost all hospital bills for patients were paid by insurance. Therefore, we took full advantage of this for our patients and the average hospitalization rate has been 1200 days/1000 population. We act as the patients advocate and get the best deal possible for them, including that extra day. It has become an ingrained habit.

In our Lifeguard IPA our hospital rate is 375. We recognize that that one extra day in the hospital will pay for the baby’s entire first year of medical care in the office. Our motivation is to get the best deal for our patients and make medical care affordable to them. So prepayment isn’t all bad under some circumstances.

Call it what you will, insurance is a form of prepayment. I believe we should shake the insurance mentality and look at health financing without the catastrophic colored glasses. We recognize that the manner and amount in which insurance payment is made has an effect on the behavior of patients, doctors and hospital bureaucrats.

What do we need to do to maximize child health care?

1. Get every child into the medical mainstream.

2. Encourage health insurance supervision services with the preventive and anticipatory guidance services.

3. Encourage personal care and continuity of care to reduce costs and humanize medicine.

4. Encourage early illness care and early effective treatment.

5. Reduce administrative third-party costs.

6. Reduce the overutilization of emergency rooms, hospitals and reduce unrequired surgery.

7. Make hospitals costs conscious and more efficient.

8. Insure freedom of choice and practice.

9. Retain the principle of sharing the risks.

I find first-dollar coverage with deductibles and coinsurance on hospital and surgery fees faulty in items 5 and possibly 7. Yet for the poor, the near-poor and for a lot of young families with children, it is probably essential if we really want them to have care. Packaging services will help item 5.

I find CHIP most economical. It might be a problem in items 2 and 4. Actually, if properly done, it could encourage 2 and 4. Unless restructured, it would be a problem in items 6 and 7. If properly done, i.e., charging significant coinsurance on hospital, emergency room and surgery services paid for through the catastrophic policy, it should work. A total annual out-of-pocket cap should be part of the package.

Sincerely,

Glenn Austin, M.D.

GA/erg

P.S. Just received the copy of Fisher’s Letter. Thanks. Look forward to seeing you in New Orleans.

Letter from Institute for Liberty and Community John McClaughry

Institute for Liberty and Community from John McClaughry

Dr. George Ross Fisher

829 Spruce Street

Philadelphia, PA 19107

Dear George:

Maybe a year ago you sent me a letter asking about some color stories from within the EOB and suggested that we meet somewhere to surround a few beers in connection with your next book. I am embarrassed, George, that I didn’t reply. The reason was that I really had no idea of what kind of EOB stories you might have had in mind, and at the time I had no idea when I might next venture out to what some people laughingly call the civilized world. So I did the logical thing. I set your letter aside.

On the first point, you might want to look at Dave Stockman’s hype up the new book, which doubtless contains numerous EOB stories. Another source of internal expose is Paul Craig Roberts, THE SUPPLY SIDE REVOLUTION: ACCOUNT OF POLICY MAKING IN WASHINGTON (Harvard, 1984), which is Craig’s account of economic policy battles within the Regan administration. It gives a real flavor of the chronic paranoia one must live with: identifying all real and prospective enemies and allies, manipulating the media, covering one’s ass with a paper trail, etc. Depressing stuff, really.

On the second, I rarely emerge these days. I only venture out when somebody pays. I’m on a Presidential Task Force at the moment, but thanks to seeing dimwitted drafting work by its creator, it has no money for paying member’s expensive, so to hell with it. Working for free is one thing, but paying my own way down there to work for free is beyond the pale.

I am tentatively planning to be in Philadelphia on September 20-21, and if nothing goes wrong perhaps we could meet them. Hope the book is going well despite the absence of any help from me.

Yours truly

John McClaughry

PENNSYLVANIA MEDICAL SOCIETY LIABILITY INSURANCE COMPANY

PENNSYLVANIA MEDICAL SOCIETY LIABILITY INSURANCE COMPANY

777 East Park Drive, P.O. Box 8375

Harrisburg, PA 17105-8375

(717) 558-7500 Fax (717) 558-9804

October 25, 1989

George R. Fisher, III M.D.

829 Spruce Street

Philadelphia, PA 19107

Dear George: It was a pleasure to learn of your election as PMS Trustee from the First District and on behalf of PMSLIC’s management staff, I congratulate you and send our best wishes for an active and challenging term. I do hope that the continued viability of the Company is dependent upon the loyalty and degree of solitary that the PMS members feel toward their wholly owned subsidiary. I truly believe that we have accomplished much since our inception in 1978 and that the Company is worthy of that confidence.

Sincerely

A. John Smither

President

AJS/sa

cc: Betty L. Cottle, M.D.

Beaver Valley Orthopedic Associates

Beaver Valley Orthopedic Associates

1415 Sixth Avenue, P.O. Box 816

Beaver Falls, PA 15010

Phone 843-7812

November 10, 1989

George R. Fisher III, M.D.

829 Spruce Street

Philadelphia, PA 19107

Dear George:

Congratulations on becoming Trustee from Philadelphia. Needless to say, your vast experience and expertise in all areas of organized medicine make you a valued part of the Board.

I am looking forward to working with you whenever the occasion arises.

Sincerely,

John W. Lehman, M.D.

JWL/kaa

The Effect of Tax Law on Health Costs: The IRA for Health

The Effect of Tax Law on Health Costs

The IRA for Health

Section I

Chapter Three

Introduction

If the preceding chapters have done nothing else, I hope they have at least acquainted the reader with the fact that the current federal deficit is currently made worse by seventy billion dollars through the tax exemption of health insurance premiums, the largest American tax loophole ever recorded. Further, this tax exemption is inequitably distributed and is a source of societal friction which could express itself in unpredictable ways. And therefore the politics of dealing with it must be very carefully handled. This chapter is a serious description of a proposal for dealing with the issue. I believe it contains nothing which would injure a component of society, and it would not increase the federal defeat. It would slowly remove health costs from employer budgets, and it would ultimately nudge them considerably.

The idea of a Health IRA had its beginning at a dinner for the White House policy staff which I was invited to address in 1980, and the Provocateur was John Mc Claughry, then Senior Policy advisor in the Reagan administration. It must be remembered that the IRA (Individual Retirement Account) law had not yet been passed, but John must have heard about it, and suggested an extension to health costs. Since Mc Claughry’s main intent was in agriculture, he never did much with the health idea. But I was electrified by the idea and took it back to the American Medical Association. Curiously a relatively similar idea was independently brought to the AMA by Dr. Michael Smith of Thibodaux, Louisiana (he called it The CHIP program) the AMA took quite a while to digest the idea but it was eventually adopted by the AMA House of Delegates as an official AMA policy proposal. Somewhat later, but entirely independently Peter Ferrara of the Cato Institute and John Goodman of the Institute of Policy and Research came on the idea and pushed it forward as a replacement for the Medical program. My own views are more expansive. I believe that all health insurance should be eligible for the IRA approach. with a voluntary conversion provision any time after age 65..

Funded Insurance.

Having rattled the cage about tax deductibility in the previous two chapters, it is necessary to make another digression before discussing the Health IRA. It relates to the second flaw in the tax laws affecting health insurance. Employer- paid health insurance premiums are tax deductible, but it is forbidden to carry the benefit forward beyond the year in which it is earned. There were probably good uses for this limitation which are obscure to me, but the essential fact is this limitation made it impossible to build up cash value within a health insurance policy the way you normally build up a cash value within a whole life insurance policy, except by HSAs. Using the reasoning of life insurance, all health insurance is term insurance. Using the reasoning of social legislation, health insurance is a pay as you go scheme. Any way you look at it, health insurance is by law hampered in using the massive power of compound infected to reduce its ultimate cost. Here is the appeal of IRA for Health in the eyes of Peter Ferrara and John Goodman: forty years of compounding where it could greatly reduce the cost of Medicare when the individual reaches age 65, and the existence of the funded reserve would make the insurance promise a lot more secure. Alternatively, just allow everyone to have two policies, one for the current expense, and one for saving for the future.

Portability.

I like that thought, too but for me, an equally important need is to build up a reserve within the policy so the individual could experience periods of unemployment without losing his health insurance. To lose your insurance when you lose your job crippled the Clinton Health Plan, and preventing a pre-existing condition limitation crippled the finances of the insurance companies because the average time between job turnovers was 3.5 years Obama plan, almost all chronic disorders were excluded unless the Obama administration was willing to raise premiums. Some hidden hand was unable to concede the point, and Obamacare costs spiraled out of control. Either the insurance must transform from term insurance to permanent insurance, or else cost would be insupportable. Apparently, those speaking on behalf of employers were unable to concede either point, so the situation just drifted and got more expensive. I have repeatedly seen patients who became sick while they were unemployed. And then became they had developed a “preexisting illness” they became uninsurable even if they got a job. Or they couldn’t get a job because employers recognized they were expensive to hire. To me, the linking of health insurance to employment was a concept which needed re-thinking if individual tragedies were to be avoided. Somehow, it was easier to characterize such opinions as insensitive, than to do anything to repair the underlying problem.

Furthermore, part of my job is to listen to people’s troubles. Many times I have heard patients complain they hated their jobs but were afraid to quit for fear they would become unemployable during the change-over. For practical purposes, health insurance under the employer-based system is not portable between jobs. It has not already collapsed because so many diseases of younger people have been cured, adding thirty years to life expectancy. If the new employer provides group health insurance, it is on his own terms and those terms may be unfavorable to the individual. I have just once in sixty years of practice, encountered an employer who changed the benefits of his group policy and was thus able to terminate the ongoing payments to the dependent of one employee. Employer casual group health insurance is a reasonably good system. But as the health of the nation improved it developed lots of flaws which might have been corrected. They weren't, because the health part was never the main concern of enough employers, so they permitted the health companies to resort to short term patching.

To me, it is a flaw that the employer sets the terms of the policy. It seems much better if a way can be found for the employee to own his own policy, raise, lower or change the benefits as he is willing to pay for them and carry his policy with him as he chooses his own employment circumstances. The employer is mainly interested in the cost of the employee benefit, so let him restrict his interest to how much he is willing and able -- to pay.

No Well-Run Hospital will Tolerate Bullet Holes

When they repaired our bullet hole at the Delaware Hospital recently, it was much more than a renovation of the clinic pharmacy. It symbolized a new generation assuming power in the hospital.

There were originally three bullet holes in the clinic: mine, Mrs. DuPont's, and the pharmacy. Mrs. DuPont and mine were quietly patched soon after the incident, but the small hole in the ceiling above the pharmacy window went unrepaired for ten years. That was not an oversight.

Hospital people who were active spectators of the shootout repeatedly protested any attempt to repair the small unobtrusive hole in the false ceiling, bothering no one but symbolic to a cluster of insiders. Even when the wing was completely gutted and renovated, that small patch of the ceiling was left untouched. Because some of us wanted it left alone, our wishes were respected in "our" hospital. The Delaware Hospital, you see, once experienced a shooting incident. It happened very much like a certain episode in the movie called “The Godfather”, and indeed the recent criminals may well have got the idea from the movie. In any event, a very dangerous criminal was actually brought from prison to the hospital to have an x-ray. Ordinarily, prison authorities give inmates no advance notice they are going to the hospital. However, this prisoner was to have his gallbladder x-rayed. We don’t x-ray gallbladders this way very much at the present time (ultrasound examination has largely replaced x-ray) but in those days it was necessary to swallow several pills the night before, so the dye could have time by morning to concentrate in the gallbladder. Therefore, when the prisoner was given the pills to swallow, he knew he was going to the hospital in the morning. His buddies on the outside knew he was going too, and where he was going. How this grapevine works is, of course, a mystery, but it is natural to surmise some prison guard accepted a bribe.

So on a nice uneventful diabetic clinic morning at the hospital, the prison guards arrived with their manacled prisoner, marching him down the clinic corridor toward the x-ray department at the end of the hall. As this jaunty group passed the men’s room, the prisoner pleaded to be allowed to relieve himself. The guard went into the men’s room with him, unlocked his handcuffs, and waited. After washing his hands, the prisoner pushed a crumpled paper towel deep into the trash can, seized the gun which his buddies had previously hidden there, and wheeled around, shooting.

His getaway was well planned and smoothly executed. Everyone in the area dived for cover as he fired shots in random directions. By the time people began to peep, he had run down the hall, out the door, and into a waiting car. He was gone.

One of the volunteers in the clinic was a certain Mrs. DuPont, also a member of the board of trustees of the hospital. She was about thirty-five years old, surely one of the ten most beautiful women in the nation. How close the bullet really came to her I don’t know, but it was certainly closer than any bullet had ever come before, and she was scarce to be blamed for feeling she had a close call. My bullet was lodged in the wall a foot or so from the desk where I usually sat on Fridays, only this wasn’t Friday so I wasn’t there to have a close call. But if it had been Friday I might well have been sitting there, and I might well have had a close call. I mean, this event was really exciting.

So we all had a lot to talk about, with a lot of close calls we almost had. A group of old friends and old casual acquaintances were united in a shared experience which provided a welcome common topic of conversation. The doctors and the orderlies, the chambermaids and the heiress, the nurses and the administrative clerks, had a common event. Even if any of them manage to live another fifty years, I suspect they will rejoice in meeting anyone who can reopen the reminiscence.

The group had a strong sense of fraternity even before this notorious event, but it was formal. Titles were used, rules were pressed, formalities respected. The nurses wore the caps of their diploma schools, the volunteers wore pink aprons, the interns wore white suits. The attending physicians wore street clothes but they were a sort of uniform, too. In Wilmington, I wore a non-matching tweed jacket and grey flannel pants, like the other doctors. In Philadelphia, In some circumstances, it would have been a dark suit. The clinic ran by rules finely understood even if entirely unwritten. It was quite acceptable to ask Mrs. DuPont to dispose of a bottle of urine, but it would have been unthinkable to ask her to have lunch. We all nodded and smiled at each other in passing, but we didn’t chat except within our own groups. But the shooting episode was an enduring ice breaker. It was something you had in common with the clinic group, to which everyone else was an outsider. People retire, people, die, Times Change. New brooms sweep into administration and unknowingly sweep aside old icons. A new pharmacist regarded the bullet hole as a small curiosity which someone had told him about. A new head nurse had other things to worry about.

On the fourth or fifth time the contractors set about to patch the ceiling over the pharmacy window, no one of the original group was present to intervene. Since the area had been so totally renovated as to be almost unrecognizable as the old clinic with curtains between the beds, the little bullet hole was the last link with the past for the dwindling but still fairly numerous group of people who remembered another era. It is perhaps most forgivable for the heedless young professionals who bustle through the place, not to have known nor even to recognize the name of Dr. Lewis B. Flinn. Dr. Flinn died a few years ago, in his eighties, looking like a Roman Senator almost to the end.

Lew Flinn dominated the medical scene in the entire state of Delaware, but particularly in Wilmington, for sixty years. There were those who called him a dictator, but he was so universally revered it was difficult to find a single person who would criticize his decisions and actions. Some people, particularly the outs, the people who don’t count, resented his power and prestige. But in the thirty years, I knew him, I never heard of serious opposition to even one of his proposals. Lew Flinn can fairly be said to have transformed Delaware medicine from a second- rate hodgepodge into a professional environment of the first rank. Within the smallest state in the Union, he created the second largest private hospital in America. Late in his career, he investigated the idea of founding a medical school in Delaware and concluded without serious opposition that the quality of physicians in Delaware would be harmed by it. A new medical school takes time to amount to something and provides second-raters until it gets established. By contrast, Delaware was currently able to attract the cream of Ivy League schools to practice there, and it would be a step back to do anything but continue the process. There was nothing prideful in this conclusion, but there could have been. When Lew Flinn first came to Wilmington as a doctor he was diving into a pool of third rates, and misfits. Why in the world would an honor graduate of John Hopkins want to practice in Wilmington?

Lew Flinn was in fact such an honor graduate of John Hopkins that he eventually acquired certificate number one, of the American Board of Internal Medicine. With his training and natural ability, Flinn could have mattered anywhere he wanted to. He could have been successful in just about any medical career. Instead, he chose to come back to his home town. And make something of it.

Flinn had everything, absolutely everything. Wealth in the family, excellent connections, brains, and training. His manners were so instinctively gentlemanly that the simplest conversation would intimidate any awkward soul who was unable to match the occasion with the appropriate response. He could be brisk and disdainful, and commanding when the situation called for strength, but he seldom needed to call on anything but gentle persuasion.

However, of all the qualities which served him in his career of transforming Delaware medicine, surely the most important one was physical beauty. Eyebrows tend to rise at that kind of a statement. Nevertheless, a true understanding of the magnetic power of the man is best acquired by going to the Delaware Academy of Medicine building overlooking the pictures of former presidents. The first picture on the wall is of Lew Flinn, at perhaps age thirty. No movie star ever had a publicity picture taken which radiated a more electrifyingly handsome profile. When Lew Flinn approached a DuPont heiress with a request for money for the hospital, he got it. And his courtly manner turned the response of men from envy to admiration. If you want to get things done, look and act like that. While it was absolutely impossible to think of Flinn as a philanderer, it is easy to see why he was an irresistible medical evangelist.

Wilmington had four hospitals during the early decades of Flinn's career, and three of them were supported by different owners of the DuPont company. Flinn concentrated on the Delaware Hospital, but he also was active in promoting the Memorial and the Wilmington General Hospital. Eventually, he became chairman of the Department of Medicine of all Three. That may have seemed like a bit much to some of his colleagues, and at one point he was voted out, by the Medical staff of one of them. His power and prestige at the Delaware Hospital were never challenged, and he steadily built up its medical staff by recruiting specialists from out of town to came to Wilmington; I was one he recruited. He appeared out of the audience at a Chicago meeting where I gave a paper and invited me to have dinner with him. I can think of no other reason why he would have been at the meeting, and I heard similar stories from others who were recruited. I don’t believe he was ever paid a penny for his administrative work.

Flinn became a member of the board of trustees of the hospital, and from that position was able to advance the hospital in a number of ways. He knew what the town needed in the way of laboratories, equipment, and specialists. The trustees were guided into doing all the expensive things which make a hospital into one of the best in the country. He saw to it that the doctors were pampered. They had their own lounge and coat room, constantly supplied with hot coffee and daily newspapers. There was a separate doctors' dining room (the senior hospital administrators ate there too and were welcome members of the medical community), there were white table cloths. On Friday, fish day in that era, there was an oyster stew or lobster bisque. It was a great clubhouse to have around and it was so by design. It was lots of fun to come from Philadelphia, attend a doctor’s conference, work in the free clinic, and adjourn for lunch. Flinn built up a medical staff by courtesies when no other inducement would have done the job. We all liked each other.

It made Lew Flinn uneasy, to have to describe to other people what he was up to, what his plans were. If he proposed something, it was a proposal for immediate action and he meant to have it happen right now. On one occasion, though, he confided in me his philosophy of teaching programs for the internet and residents. He was not particularly interested in attracting resident physicians to the hospital, although they were welcome enough. The purpose of the teaching program for the interns was to serve as a framework for continuing education of the practicing physicians of the community. He fed them oysters to get them to come to the conferences and to have lunch with other practicing consultants in the dining room. You educated practicing doctors by asking them to help educate the interns.

After he retired, he embarked upon the project which was his greatest achievement, the unification of the three hospitals into the Delaware Medical Center. His reasoning was not so much that consolidation would reduce duplication of equipment, although that was an argument. The main need for a 1200 bed institution was to create pools of patients which were sufficiently large to make it possible for a specialist to make a living. When that was possible, Delaware could relax its constant recruitment efforts and expect the institution to generate a first class staff without subsidies or teaching salaries. It is my present information that this plan worked beautifully.

The new building, on ground donated by a DuPont widow, is a spectacular piece of hospital architecture. Money cannot buy a more sumptuous physical plant. One suspects Lew Flinn’s fundraising capabilities were a major factor in the lavishness, probably mostly through a spontaneous wish by his admirers to build a suitable memorial, to his memory.