Talking health care with BJC’s CEO and president


For a guy of 53, Steven H. Lipstein has done a lot in the controversial world of hospital administration. His world has become the subject of intense public interest because of Washington’s halting efforts to create new rules for health insurance and care. He’s quite willing to patiently explain health care economics, but more on that later.

Lipstein became president and chief executive officer of BJC HealthCare in 1999. The system, with 26,000 employees, is the largest employer in greater St. Louis.


With revenues of $3 billion, BJC HealthCare operates 13 hospitals in the St. Louis area, outstate Missouri and southern Illinois, including Barnes-Jewish Hospital, St. Louis Children’s Hospital, both affiliated with Washington University Medical School; Christian Hospital; Missouri Baptist Medical Center; Boone Hospital Center in Columbia, Mo., and others.

Lipstein lives in Clayton with his wife, Susan, where they have put two sons and a daughter through the public schools. They are members of Congregation Shaare Emeth. A native of Wilmington, Del., Lipstein earned a B.A. in economics from Emory University in Atlanta in 1978 and a master’s in health administration from Duke University in 1980.

He then served a two-year fellowship in health services administration at Massachusetts General Hospital, followed by 13 years with the Johns Hopkins Hospital and Health System in Baltimore, then five years in top executive positions with the University of Chicago Hospitals.

Despite this heavy resume, Lipstein is an easy man to talk with about the debate over health care reform. He spends a lot of time trying to explain why some of us may think we pay too much for an aspirin or a few cotton balls when we visit one of the BJC HealthCare hospitals.

He’s an avid bicyclist, riding a Bianchi to participate in the MS 150 around Columbia, Mo. (this year on Sept. 12-13) to support a cure for multiple sclerosis, as well as the Register’s Annual Great Bicycle Ride Across Iowa (RAGBRAI), sponsored by the Des Moines Register newspaper.

We spoke last week at his spacious suite of offices at 4444 Forest Park Parkway.

What does the death of Sen. Ted Kennedy and the national debate over health care mean to a hospital administrator?

We know that we have a health care system that is no longer sustainable in its current form. More and more of us are going to be covered by public options like Medicare and Medicaid. The number of people on Medicare is going to grow from about 40 million to 70 million as the baby boomers mature. Right now, Medicare and Medicaid insure about 90 million of the 310 million people who live in America. The federal government can’t afford its share of the health care bill without substantially raising your taxes or without significantly reducing what it spends on these programs.

We know we have to do something. Today Medicare and Medicaid pay BJC about 90 percent of our costs (for those patients). The way we make up the difference between that 90 percent and 100 percent is we collect more than our costs from private insurers. When we do that, that keeps pushing private health insurance higher and higher until it will no longer be affordable for people who get health insurance in the private sector.

What we have now will not be sustainable for people who have private health insurance or for people who will be moving into public health options as they get older. That’s on top of the challenge we have with the 47 million people who don’t have health insurance.

Is the public option, which has become so controversial, a good idea?

We as a nation need public health insurance options. We already have two, Medicare and Medicaid. Private health insurance markets would not want to provide health insurance for people over 65 or people at the lower-income spectrum unless the government or the employer guaranteed payment of premiums.

So what’s the best way to provide for the 47 million who don’t have insurance? I would answer your question with two questions. If the private health insurance market wanted to insure those 47 million, why haven’t they done so already? Second question: If we have two public health insurance options that are in a perpetual state of financial distress, what makes us think a new, third public option will enjoy a better fate?

It might be worthy of us to consider fixing and expanding the two public insurance options we already have instead of creating a third, new one.

How would you expand the two we have?

Let’s start with Medicaid, for those who are poor, funded by both federal and state tax dollars. I would stop making Medicaid only for poor people. I would make it an option for households making less than $50,000 (a year). That’s about 50 percent of the population.

Then we would have to create standards for eligibility and benefits across all 50 states, so we eliminate variability with 50 different state Medicaid plans.

Then you take that $1 trillion the federal government is going to spend over 10 years and you put it into this program. You increase the amount of people who will be covered and you increase how much you pay doctors and hospitals. The pay for Medicaid is so low for doctors and hospitals as to create a barrier to access.

If you could do those four things, then 50 percent of the American population would have access to medical insurance coverage through an expanded Medicaid option.

What about Medicare?

You leave Medicare pretty much as is for people over 65 and certain categories of the disabled. But you create an early buy-in option for people who are over, say, 55, who may not be working, who have an existing medical condition or who have trouble buying in a private market.

Then we create a mandate for the rest to buy insurance through your employer or through a private market. We create a mandate for individuals.

Those at the lower end of the income scale would be eligible for Medicaid. Those at the upper end of the age spectrum would be eligible for Medicare. And the private market is interested in everybody else. The private market is interested in people who can pay their own premiums.

So you wouldn’t need a public option to compete with private insurers?

We have two public options, which people already understand and private options, which people already understand. They are trying to explain this new, third public option and it’s pretty hard to understand. It could work. They could design it in such a way that it could work. But we already know there are people who are in favor of it, opposed to it – vocal on both ends. Might it not be a more affordable approach, if you will, to say instead of creating new, let’s fix what we have.

If I can explain it to you so you can understand it, maybe even write it, maybe it can be explainable to the American people in a way that is more comfortable than what is going on in the public debate.

Can we assume you are in line with the views of many hospital administrators?

The main concern with expansion of public programs from inside the industry, among doctors, hospitals, homecare companies, pharmaceutical companies, is how much the public options will pay. Will they pay below cost, at cost, above cost?

In the public sector, the payment rates are legislated. In the private sector, rates are negotiated. The negotiated rates make you feel like you can walk away. If you like what you will get, you can say yes.

In the public sector, they can legislate that you have to take care of those patients by law and that you have to accept the payment rates by law. That causes more concern.