This is a transcript of the Q&A Isabel T. Walker’s interview with Ron Werft, president of Cottage Healthcare Systems, and Kurt Ransohoff, M.D., of the Sansum Clinic, on the subject of Michael Moore’s SiCKO. To read Isabel’s article, click here.

Walker: Did you think the movie was fair?

Ransohoff: I don’t think its purpose is necessarily trying to be fair. I think its purpose is trying to say ‘this is my point to view. I think this system is seriously messed up and I’m going to make a provocative move to try to get people talking about it.’ It’s an editorial more than a documentary.

Walker: What about you Mr. Werft?

Werft: I don’t know if fair is the right question. I think the scenarios that he portrays absolutely happen in our system. So in that sense it’s a fair portrayal of the worst aspects of the US healthcare system.

Walker: So what wasn’t fair is that it wasn’t thorough?

Werft: I think there is a compassionate side to a great deal of the US healthcare system that goes unreported.

Walker: What do you think is the compassionate side of our system?

Werft: The people who work in it. The nurses, the therapists who work in the system I think do so tirelessly. Those who work in Parish Nursing. Those who are starting here locally a street medicine program. There are a lot of those people in healthcare. You don’t get that sense [in the movie] because it wasn’t the point. You get the sense that those people are in Cuba but you don’t get the sense that those people are in this country. That was unfortunate. It lost a little credibility in my view because of that.

Walker: But in order to access those compassionate people don’t you first need health insurance?

Werft: Not entirely. He [Michael Moore] could have spent nights in ERs around the country where those people have access to some of the best technology in the world without regard to ability to pay. I think in selecting the gentleman who had the two fingers cut off in a saw . . . that must have happened because the patient was there and it was reported as part of the story. It’s hard for me to imagine that happening in an ER in this country. Really hard to imagine. And it would never happen here.

Walker: Really?

Werft: Absolutely not.

Walker: So when an uninsured person shows up in our ERs he or she would never ask them to pay up before offering treatment?

Werft: Never. There was another example along those lines later in the movie.

Ransohoff: The Martin Luther King episode. That was, someone made a very wrong decision. The system is set up so that when a patient shows up in need emergency care they are to get emergency care and only after he’s stabilized can he or she be moved. Somebody at Martin Luther King Hospital must have inappropriately assumed that the person didn’t need emergency care.

Werft: There’s a federal law called EMTALA that’s part of our US healthcare system designed to prevent that.

Ransohoff: But again, that’s really emblematic of the movie. His point is to bring up the issue that the system is so complicated and bogged down in its bureaucracy that bad things can happen. Even though that specific exam was probably was more the result of some individual misjudging the situation.

Werft: I think it’s a good thing that has happened here because there’s huge interest in the healthcare system. There is a debate going on in many states across the county. California being one where there’s a very active debate about universal healthcare. The Speaker of the Assembly and the Senate Pro Tem just brought their bills together which makes it much more likely that something will happen in the legislature. So this is going to help the debate.

Walker: Moore is very focused on insurance companies and the fact that we have a profit making healthcare system in America. Is it ethical that people are making a profit off of people’s ability to get well?

Werft: I think it’s certainly ethical for people to be paid for the professional services they provide. So it’s ethical for physicians to make money providing care. It’s ethical for hospital employees to do that. If you mean is it ethical for a company or individuals to profit by denying appropriate care? Of course not. And our structures are set up to reward those systems. It’s a real problem in our healthcare system.

Walker: What do you think Dr. Ransahoff of this idea of making a profit by denying appropriate care?

Ransahoff: Nobody should make money out of denying appropriate care.

Walker: But that happens all the time.

Ransohoff: Well hopefully not appropriate care. The most difficult issue which he just sort of flirts with is . . These other countries, England, France, at some point they do say no too. Right?

Walker: He didn’t go into that, did he?

Ransohoff: But they have to. Because it’s not possible that they could do whatever anybody wanted on every single person. The difference is that in those systems the saying no is felt to be a societal necessity as opposed to a profit motive from a for-profit multibillion-dollar corporation.

Werft: [Saying no there] is not based on ability to pay. It’s based on to a greater degree on more of a utilitarian approach. It’s based on age, whether one can contribute to society. When I was [working in the National Health System] people in their late 50s early 60s you were not going to get bypass surgery.

Walker: Late 50s even?

Werft: Right, depending on your illness because it was going to be a year and a half till you got through the list. And that was accepted in that culture I think because the National Health Service grew out of a post war environment. That opportunity didn’t happen here and so I think the degree to which, until maybe very recently, the degree to which people in this country would accept that kind of a system . . . it doesn’t reflect our societal values.

Ransohoff: When people think about universal healthcare here, I think what they think is that it will be universal healthcare that will provide whatever they want, whenever they want from whomever they what. I think that’s what people think. But in these other countries, as Ron points out, it’s more part of the societal fabric that not everything is possible. And it doesn’t mean the system is bad, it just means there are limitations on what can be delivered. And in this country, it’s so fragmented. Because what Aetna may say is allowed may not be what Humana says is allowed may be different than what Blue Cross says, so you have this sense of confusion and it all seems terribly unfair. As opposed to the citizens of New Zealand, who say, “We can do this but we can’t do that.”

Werft I always had a hard time defending the system that was based to a greater degree on the ability to pay than one that had criteria that applied to the whole population. I really couldn’t, didn’t try to defend it. It’s more reflection of the societal values.

Walker: But Cottage Hospital and also Sansum must spend a lot of time trying to get their reimbursements from insurers companies. I know doctors have to put a tremendous amount of energy into getting paid just what was agreed upon.

Werft: That’s right. There was a point made in the movie about retrospective denials. Patients deal with that and so do hospitals and physicians. But here’s a point that wasn’t made. You get this sense from watching the movie that there’s this private sector insurance company that is an evil empire. And then you go to Canada and England and France and it’s a government run system which is utopian. Here, a great deal of our healthcare is insured by the federal or state governments. One of the problems that providers have with going to 100 percent governmental system is that that part of the system isn’t all that great.

Walker: Why?

Werft: At Cottage, two- thirds of our patients are represented by a government payer. Watching the movie, you get the sense that 250 million people are represented by private insurance. [That may be true but] from the hospital side, because the use of hospitals goes up as people get older, two-thirds of our patients are represented by Medicare, Medi-Cal, the Medically Indigent Adults (MIA) program from the county or California Children’s services. We have a lot of pediatric programs at the hospital. We collect an average of 72 percent of cost from those government payers. And so we shift the burden of that loss from the government sector over to the Blue Crosses, the Blue Shields, the Aetnas, the private insurers. And what that has resulted in is them shifting more of that cost burden on to their employer with whom they contract and those employers in turn pass more of that cost on, so we have [the part] in the movie showing the 9,000 dollar deductible.

Walker: It’s a vicious cycle.

Werft: It is. And there are more and more of us in this country who are affected financially where that wasn’t the case before. Until recently, if you were employed chances were you were going to have health insurance that was going to be almost free. That’s no longer the case. So I think that what’s leading to reform, it’s not the uninsured; we’ve had uninsured for decades. It’s because most of the people in this country are now burdened by these rising costs.

Walker: There’s more healthcare insecurity across the board.

Werft: And huge confusion and complexity in the systems. You can’t understand them.

Ransohoff: I think the most rapidly expanding health plans that are being sold are higher deductible plans. HMO enrollment ironically is dropping significantly because they’re too expensive.

Werft: And they’re being sold to individuals who really can’t afford to get sick. The high deductible plans. The $10,00 dollar deductible plans are being sold to people who don’t have $10,000 dollars.

Walker: So that’s a prescription for failure.

Werft: It really is. So it will compound the problem.

Ransohoff: We have the same exact issue.

Werft: As long as we have private insurance companies, they should be required to do some kind of means testing. They should not be allowed to sell high deductible policies to people who can’t afford the deducible.

Walker: Dr. Ransohoff, does Sansum spend a lot time trying to get payment for physicians or do they bill for themselves?

Ransohoff: No we bill for them. We spend an enormous amount of time trying to get paid. One of the most frustrating things for us is trying to get paid for drugs. The whole thing is changing so much. Twenty-five years ago, there weren’t $20,000 drugs. Now there’s dozens of medications that probably cost more than $25,000 a year to give to somebody. They’re phenomenally effective, spectacularly good medicines but they might be $100,000 a year. And the insurance companies are very reluctant. They will do everything possible to delay, to see if there’s a way not to pay.

Walker: So Sansum is put between a rock and a hard place.

Ransohoff: We just give it to the patient. So then we have to go get paid back.

Walker: How many people working for Sansum who work fulltime trying to get reimbursements?

Ransohoff: Dozens.

Walker: Fulltime?

Ransohoff: Yeah.

Walker: And what about at Cottage?

Werft: Sixty to eighty people.

Walker: Wouldn’t it be a relief to have a system that was universal and paid for by a single entity?

Werft: Oh I don’t have any trouble with that.

Ransohoff: Yeah but even Medicare, for some very expensive items, doesn’t exactly mail the check back instantly. They’ll ask questions and appropriately so. But they’re obviously a much more reliable payer than any private insurance company.

Ransohoff: They pay an inadequate amount on a more reliable basis.

Werft: The government does some of the same things that we criticize the insurance companies for. Right now Medicare is doing these retrospective audits on rehabilitative services. The Rehabilitation Institute in SB has just been hit very hard. They have several million dollars of audits going back to 2002, where care that was delivered five years ago and Medicare is now saying, ‘we don’t think you documented this properly . . .and you need to pay us back for care you gave in 2002.’

Ransohoff: We’ve had this happen to us actually. The insurance company said that the patient was insured. Turned out he hadn’t paid his Cobra premium. So we treated him. We asked the insurance company ‘is this guy insured?’ They said ‘yes.’ We gave him, I think it was like $100,000 worth of medication that we purchased. And then the insurance company said, “We were wrong. He really wasn’t insured.” But after they told us they was. And they just refused to pay.

Walker: How much did you end up holding bag for?

Ransohoff: Oh, for the whole thing. I mean, in that situation in some future negotiation with the insurance company . . . But for an individual physician, they’re just out of luck.

Walker: Do you break even at the end of the year?

Ransohoff: Barely. Barely. We’re a not-for-profit which is the whole reason we can continue. We’re not forced to try and generate profits for shareholders. I don’t know if we talked about this, you know about the whole Medicare area 99 thing.

Walker: You mean the way Santa Barbara County is getting stiffed?

Ransohoff: It’s a tough environment reimbursement wise in Santa Barbara.

Walker: What about the part of the movie that talked about healthcare lobbyists? Moore says there are four times as many healthcare lobbyists in Washington DC as congressmen and senators.

Werft: I’m not an authority on lobbying laws and lobbying reform. But I know that PHARMA spends huge amounts of money on campaigns and it makes a difference. Other constituents do too. But that, rightly or wrongly, that’s the way this country works.

Ransohoff: As I understand it, other countries do negotiate with pharmaceutical companies for the price of medications they provide their citizens. But that’s not the way it’s done here.

Werft: If we have reform that moves us to a universal system–where everybody has access to a standard set of benefits — which its really hard to argue against that, that everybody should have a standard set of benefits.

Walker: You would favor a system like that?

Werft: Absolutely. And then if there are things that somebody wants that are over and above that standard set of benefits, they can pay for those out of pocket. I can’t tell you what should be in the package or not, but I think we can come to an agreement on a minimum standard set of benefits is and then decide everybody has a right to it. Then it’s a question of how do you pay for it. If we move to a government sponsored system, which we have partially now, but if we move entirely to that, you still haven’t solved the problem if you still have technology costs and pharmaceutical costs that are totally out of control. The movie doesn’t address the increasing costs of healthcare and the forces that are in place.

Walker: And what are those forces?

Werft: Well if you asked pharmaceutical lobbyist they would say we wouldn’t get these great drugs unless we have a huge R & D budget. But pharmacy costs have been going up 14 to 17 percent. We don’t have controls on other devices, implants, supplies that hospitals and physicians have to buy for their practices. Price controls haven’t been effective in this county. But you can’t provide universal access and then just hope things will take care of themselves on the cost side.

Walker: If there was universal access, wouldn’t prices automatically go down because people would be getting preventative care?

Ransohoff: Sometimes those investments are very expensive and have a long payback period. Yeah, in the long run, having a society that isn’t waiting until they’re desperately ill to get care [is cost effective]. But in the short term it would be expensive.

Werft: You would have to decide to fund it. It wouldn’t happen automatically.

Kurt: So many other parts of society are going to have to be brought along with that. The doctor in Paris going to see an absolute utter stranger evidently in the middle of the night with abdominal pain, and doing no labs, no x-rays and just treating the patient struck me. That’s a wonderful system but in this county it would a very risky standard for a doctor. So if you’re going have some of that, it’s going to have to come along with some relief that, okay, the guy went to somebody’s house and did the best that he could.

Walker: That goes back to this being a litigious society.

Werft: Compared to all those countries, we’re much more litigious.

Walker: What about that woman that was left in front of the homeless shelter?

Werft: Yeah, that’s happened in LA. It doesn’t happen hear but also . . . One would need to know a little bit more about that story in order to make an accurate diagnosis. Hospitals are designed to be acute care medical institutions to address acute medical problems. And by law, they have to evaluate and screen anyone who comes into the ER. What should happen when someone who doesn’t need the services of an acute care institution but does need social services? We actually have relationship with the shelter. But there are occasions when [people needing social services] refuse to [leave]. So what should happen? In that particular case, you don’t’ know.

Walker: But it looked very bad.

Werft: It looked horrible. And nobody should ever leave a hospital ER in a hospital gown and walk the street.

Ransohoff: The real problem in the case of that person is that she’s homeless. It’s possible in another country somebody like that wouldn’t have to use the hospital. Maybe they would have been able to get outpatient care. Her problem is tragic, but she didn’t need acute hospital service, she needed very good medical care. So in England or France or New Zealand or Canada somebody [like her] would be able to be seen by a doctor everyday until she got better.

Werft: It’s a terribly inefficient way of providing medical care. Because the most expensive part of our whole system is our ER.

Walker: Wouldn’t the government be willing to pay more of the actual costs of services if prices weren’t rising so fast?

Werft: Right but there is no structure in place. Right now, it’s a totally free market enterprise price system as we deal with pharmaceutical costs and implant device manufacturers and people who make gloves and sutures. It’s whatever the market will bear and so we see the prices going up all the time.

Ransohoff: If you make an assumption that it would be impossible to give everybody everything they want . . .The government I don’t think wants to get into the business of saying who can have what because it’s very messy business. It’s easier just to say let Humana decide. But that’s very unsatisfying. When Medicare says no, you at least have a feeling that they’re not saying no to increase their quarterly profit.

Walker: Isn’t there a law that says if you’re a publicly traded, your first obligation is to your shareholders? What do you think of that?

Werft: It’s a conflict. About twenty percent of hospitals in the country are for profit. There’s no question that the mission of nonprofit organizations like Sansum and Cottage is to do their level best to meet the needs of the community. And there is that edge in a for-profit because they are accountable to shareholders.

Walker: How kind of reform do you think lawmakers should pursue?

Werft: You mean wow would you solve it? [They both look at their watches.] Gotta’ go. [Laughter]

Ransohoff: I think people need to get much more engaged in the discussion about these issues and become much more aware of the problems that are out there. I think some sort of system, single payer or at least single standard.

Werft: As a starting point. We’ve never had sweeping reform [in the US]. We’ve had incremental change in the healthcare system since the 1920s. Every 15 years or so there’s been some fundamental change [in our system]. So it’s unlikely that we’re going to we’re going to create a US National Health System in the next presidential election. But I think we should get to an agreed upon standard benefit package and that, through some kind of a financing mechanism, everybody has access to. Because it’s an embarrassment. I say that not as a healthcare [executive] but as a resident, an American.


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