The Latest: UPMC, “America’s Bitter Pill,” TIME, and 60 Minutes

By: Paul Wood

Not long ago, UPMC President and CEO Jeffrey A. Romoff spoke with author Steven Brill about the hospital system he has helped to create over the past 40 years. The author of an earlier ground-breaking article on health care in TIME , Brill wanted to know how to “fix” the U.S. health care system, an investigation that took on new meaning after his own open-heart surgery. And what he found is something UPMC’s 62,000 employees are very proud of – and the rest of western Pennsylvania should be, too.

The answer, he says, is UPMC.

brill-cover-finalWhile Brill’s new book, “America’s Bitter Pill” (and an adaptation in TIME magazine), deals with the politics of Obamacare, he also examines five of the nation’s leading health care institutions: UPMC, Cleveland Clinic, Geisinger Health System, New York-Presbyterian Hospital, and Partners HealthCare-Harvard.

Brill writes that UPMC’s integrated payer-provider model is part of the solution to providing the highest-quality care at an affordable price. He describes how UPMC’s “highly competitive and aggressive oligopoly” perfectly aligns economic incentives in the context of the clinical and academic excellence of a world-class medical center. All this is against a backdrop of the lowest insurance costs in the state and among the very lowest in the nation, based on recent data.

No other hospital system has been able to achieve all this. Why not?  Because UPMC has something the others don’t: a trifecta of excellent clinical care, its own insurance offerings and internationally recognized academic medicine.

Instead of Obamacare, which Brill says the U.S. can’t afford, he proposes the payer-provider model of UPMC with several regulations. One would be to cap operating profits of these new dominant systems at 8 percent a year. The current average is about 12 percent. (For the 2014 fiscal year, UPMC’s operating margin was only 1.7 percent, and was just 1.3 percent the year before – meaning we’re re-investing our earnings back into patient care and the communities we serve.)

Brill writes that UPMC’s structure makes sense, and so does cutting out the middleman.  He writes, “As Romoff put it, ‘All the incentives are aligned the right way. It’s the beauty of being the payer and provider at the same time. The alignments of interest are just so pure.’”

Romoff also sat down with “60 Minutes” reporter Lesley Stahl late last year for a story that aired last night about Brill’s book.  It’s disappointing that the segment didn’t adequately convey the roughly 90-minute conversation that Romoff had with Stahl – or even why Brill’s book shares the detailed story of UPMC’s success or especially why it’s the solution for the future. During his talk with Stahl, Romoff described the American health care system as being disjointed, dysfunctional and too complex, with insurance companies having different incentives than doctors, who have different incentives than hospitals. As Brill does in his book and in the TIME article, Romoff pointed to UPMC’s integrated system as offering sophisticated, high-quality health care for some of the lowest costs to the patient in the nation. That’s the real news that a casual observer of the “60 Minutes” piece might have missed.

Paul Wood is Vice President and Chief Communications Officer at UPMC.